Credit unions executives located in or near Rep. Gary Miller's(R-Calif.) district in Southern California voiced their approval ofa bill introduced by the House Financial Committee leader on June28.

H.R. 2572, The Regulatory Relief for Credit Unions Act, wouldestablish a risk-based capital system for credit unions, authorizethe NCUA to delay or modify CFPB regulations, and provideadditional regulatory relief measures.

In a release from Miller's office, Richard L. Harris,president/CEO of $1.2 billion Caltech Employees Federal CreditUnion in La Canada, Calif., said the bill is “filled with practicalideas on how to cut down on the number of needless regulatorycompliance issues my employees deal with every day.” He added thatthe legislation is an excellent starting point for regulatoryrelief.

Debra Schwartz, president/CEO of the $2.4 billion MissionFederal Credit Union in San Diego, said the bill would help creditunions manage today's stringent regulatory environment.

“Our employees should be focused on serving consumers, whom wecall members, and assisting them with their loans – not on keepingup with and implementing endless and often unnecessary governmentcompliance,” Schwartz said.  

On the other end of the asset spectrum, Gary Nelson,president/CEO of the $69 million La Loma Federal Credit Union inLoma Linda, Calif. said the bill would help ease the amount of“onerous regulation” credit unions face after the financialcrisis.

“Representative Miller understands that credit unions should befocusing on maintaining the flow of credit to our local communitiesinstead of being caught up in government regulation aimed at badactors in the financial services arena,” Nelson said.

CUNA President/CEO Bill Cheney said in a letter to Millerfollowing the bill's introduction that the current credit unioncapital regime was imposed on credit unions in 1998, and itincludes leverage ratios and other restrictions that are hardwiredinto the statute. 

“There are many lessons to learn from the 2008-2012 bankingcrisis, including the importance of capital and the importance ofhaving regulators equipped to respond to crisis,” Cheney noted.“Your legislation would amplify the NCUA's authority to implement arisk-based capital regime and provide NCUA the flexibility toadjust leverage requirements.” 

The bill would also give the NCUA the ability to adjust capitalrequirements when necessary, Cheney said. 

“The authority proposed by your legislation is designed toproduce capital rules similar to those that small banks in theUnited States must follow,” he said.

Additional provisions in the bill would require the NCUA toconduct a study of the Central Liquidity Facility for credit unions and makelegislative recommendations for its modernization and allow theNCUA to grant federal credit unions a waiver to follow a state ruleinstead of a federal one in certain situations.

Other provisions include requiring the NCUA and CFPB to revisitcost and benefit analyses of rules after three years so they have atrue sense of the compliance costs for credit unions, providingcredit unions parity with FDIC-insured institutions when it comesto deposit insurance coverage on interest on lawyers trust accountsand giving credit unions better control over their investmentdecisions and portfolio risk.

The bill had no co-sponsors upon introduction but given Miller'svice chairman position on the House Financial Services Committee,one or more measures could appear in a regulator reliefpackage.

“Ultimately, I think you'll see the committee see what they cancobble together from the proposals out there,” said NAFCU VicePresident of Legislative Affairs Brad Thaler. “That remains theirgoal, to try to move a number of things as a package, but whatmakes up that package has yet to be determined.”

Thaler added that such a bill could either take the form of anexisting bill with additional provisions added on as amendments, ora broader package that includes regulatory relief measures for bothcredit unions and community banks, that would have limitedamendments. The legislations would not only need bipartisan supportbut also backing from both credit unions and banks.

“I don't think they want to see one industry or another lobbyingagainst the bill,” Thaler said. “It's not necessary for everyprovision to please both sides, but it will have to be balanced.We'll say if there's a major provision in there for banks, theremust also be one for credit unions, too.”

Retired CUNA president turned lobbyist Dan Mica agreed with thatpremise, saying a regulatory relief package would need to behelpful to both credit unions and banks to pass. However, Mica saidhe's confident the two sparring industries can come together tocomplete the task.

“There are a number of issues banks and credit unions agree ononce you get beyond the tax issue and member business lending,”Mica said. However, he added that divisions within the Republicanparty may hinder reg reform more than the differences betweencredit unions and banks.

Of House Majority Leader John Boehner, Mica said, “He's a greatguy personally, but I wouldn't wish his job on anyone.”

Miller appears willing to accommodate both banks and creditunions; he's also an original cosponsor of H.R. 1750, the CommunityLending Enhancement and Regulatory Relief Act of 2013, which wouldprovide regulatory relief to community banks. 

The bill, which has been endorsed by the Independent CommunityBankers of America, would exempt community banks from some new CFPBmortgage rules, exempt community banks from Sarbanes-Oxley internalcontrols assessment mandates, provide some capital reform, andrequire justification of new or amended accounting principles. Thebill would further eliminate redundant annual privacy noticemailings, a provision that already passed the House March 12 asH.R. 749. The legislation was introduced in the Senate later that month.

Thaler said he's optimistic the privacy bill will pass theSenate 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, Thalersaid to pass anything in the upper chamber requires nearlyunanimous consent. That requires enough time to get it oneveryone's radar.

“I think we have time to do that, and we are making progress outthere,” he said.