Credit unions executives located in or near Rep. Gary Miller’s (R-Calif.) district in Southern California voiced their approval of a bill introduced by the House Financial Committee leader on June 28.
H.R. 2572, The Regulatory Relief for Credit Unions Act, would establish a risk-based capital system for credit unions, authorize the NCUA to delay or modify CFPB regulations, and provide additional regulatory relief measures.
In a release from Miller’s office, Richard L. Harris, president/CEO of $1.2 billion Caltech Employees Federal Credit Union in La Canada, Calif., said the bill is “filled with practical ideas on how to cut down on the number of needless regulatory compliance issues my employees deal with every day.” He added that the legislation is an excellent starting point for regulatory relief.
Debra Schwartz, president/CEO of the $2.4 billion Mission Federal Credit Union in San Diego, said the bill would help credit unions manage today’s stringent regulatory environment.
“Our employees should be focused on serving consumers, whom we call members, and assisting them with their loans – not on keeping up with and implementing endless and often unnecessary government compliance,” Schwartz said.
On the other end of the asset spectrum, Gary Nelson, president/CEO of the $69 million La Loma Federal Credit Union in Loma Linda, Calif. said the bill would help ease the amount of “onerous regulation” credit unions face after the financial crisis.
“Representative Miller understands that credit unions should be focusing on maintaining the flow of credit to our local communities instead of being caught up in government regulation aimed at bad actors in the financial services arena,” Nelson said.
CUNA President/CEO Bill Cheney said in a letter to Miller following the bill’s introduction that the current credit union capital regime was imposed on credit unions in 1998, and it includes leverage ratios and other restrictions that are hardwired into the statute.
“There are many lessons to learn from the 2008-2012 banking crisis, including the importance of capital and the importance of having regulators equipped to respond to crisis,” Cheney noted. “Your legislation would amplify the NCUA’s authority to implement a risk-based capital regime and provide NCUA the flexibility to adjust leverage requirements.”
The bill would also give the NCUA the ability to adjust capital requirements when necessary, Cheney said.
“The authority proposed by your legislation is designed to produce capital rules similar to those that small banks in the United States must follow,” he said.
Additional provisions in the bill would require the NCUA to conduct a study of the Central Liquidity Facility for credit unions and make legislative recommendations for its modernization and allow the NCUA to grant federal credit unions a waiver to follow a state rule instead of a federal one in certain situations.
Other provisions include requiring the NCUA and CFPB to revisit cost and benefit analyses of rules after three years so they have a true sense of the compliance costs for credit unions, providing credit unions parity with FDIC-insured institutions when it comes to deposit insurance coverage on interest on lawyers trust accounts and giving credit unions better control over their investment decisions and portfolio risk.
The bill had no co-sponsors upon introduction but given Miller’s vice chairman position on the House Financial Services Committee, one or more measures could appear in a regulator relief package.
“Ultimately, I think you’ll see the committee see what they can cobble together from the proposals out there,” said NAFCU Vice President of Legislative Affairs Brad Thaler. “That remains their goal, to try to move a number of things as a package, but what makes up that package has yet to be determined.”
Thaler added that such a bill could either take the form of an existing bill with additional provisions added on as amendments, or a broader package that includes regulatory relief measures for both credit unions and community banks, that would have limited amendments. The legislations would not only need bipartisan support but also backing from both credit unions and banks.
“I don’t think they want to see one industry or another lobbying against the bill,” Thaler said. “It’s not necessary for every provision to please both sides, but it will have to be balanced. We’ll say if there’s a major provision in there for banks, there must also be one for credit unions, too.”
Retired CUNA president turned lobbyist Dan Mica agreed with that premise, saying a regulatory relief package would need to be helpful to both credit unions and banks to pass. However, Mica said he’s confident the two sparring industries can come together to complete the task.
“There are a number of issues banks and credit unions agree on once you get beyond the tax issue and member business lending,” Mica said. However, he added that divisions within the Republican party may hinder reg reform more than the differences between credit unions and banks.
Of House Majority Leader John Boehner, Mica said, “He’s a great guy personally, but I wouldn’t wish his job on anyone.”
Miller appears willing to accommodate both banks and credit unions; he’s also an original cosponsor of H.R. 1750, the Community Lending Enhancement and Regulatory Relief Act of 2013, which would provide regulatory relief to community banks.
The bill, which has been endorsed by the Independent Community Bankers of America, would exempt community banks from some new CFPB mortgage rules, exempt community banks from Sarbanes-Oxley internal controls assessment mandates, provide some capital reform, and require justification of new or amended accounting principles. The bill would further eliminate redundant annual privacy notice mailings, a provision that already passed the House March 12 as H.R. 749. The legislation was introduced in the Senate later that month.
Thaler said he’s optimistic the privacy bill will pass the Senate this congress.
“Last year, you’ll recall it went to the Senate in waning days, but this one got over there early.”
Because just a handful of senators could block a bill, Thaler said to pass anything in the upper chamber requires nearly unanimous consent. That requires enough time to get it on everyone’s radar.
“I think we have time to do that, and we are making progress out there,” he said.