When credit union trade associations spoke, Sen. Richard Shelby(R-Ala.) and his staff apparently listened. As a result, industryleaders are pleased with yesterday's draft of the Senate BankingCommittee's proposed Financial Regulatory Improvement Act of 2015and its inclusion of specific guidance regarding credit unionregulatory issues.

“We are pleased that the discussion draft has a number ofprovisions to provide regulatory relief to credit unions,” NAFCUPresident/CEO Dan Berger said in a prepared statement. “We are continuing toreview it and look forward to working with the chairman andcommittee members prior to next week's mark-up to help advanceNAFCU's priorities for credit union regulatory relief.”

CUNAalso was pleased with the bill, according to President/CEO JimNussle, who thanked Shelby for offering so many credit unionsolutions.

“The draft bill includes three credit union-specific provisionsthat will allow budget transparency for the NCUA, allow privatelyinsured credit unions to become members of a Federal Home Loan Bank(FHLB) and provide parity for all credit unions with under $1billion in assets to join the FHLB system,” Nussle said in aprepared statement. “These common sense provisions have widebipartisan support, and I urge Congress to work together to advancethese important provisions.”

The more than 200-page bill contains eight separate sections,including changes to Dodd-Frank that would mandate tougher capitaland oversight standards on banks with more than $50 million inassets. The provisions affecting credit unions are containedprimarily in the first section, which contains 25 differentmeasures to provide regulatory relief for credit unions andcommunity banks.

Specifically, the bill would require the NCUA to hold public budget hearings, and to study theimpact of RBC2, the agency's latest risk-based capital proposal, onmortgage servicing assets. The bill also mandates statutory relieffrom annual privacy notice requirements and grants safe harborqualified-mortgage (QM) status for certain loans held inportfolio.

Additionally, the bill would require the Federal Housing FinanceAgency to withdraw its proposed rule revising Federal Home LoanBank membership requirements while GAO studies the issue, and grantcredit unions parity with community banks in the definition ofcommunity financial institution under the Federal Home Loan BankAct.

The NCUA, on the other hand, expressed concern about the billand plans to work with the Senate Banking Committee to makeimprovements.

“Chairman Shelby has offered a lot for us to consider, and theNCUA is carefully evaluating the discussion draft's manyprovisions, especially those affecting credit unions and theagency,” John Fairbanks, Public Affairs Specialist for the agency,said. “We are concerned about potential impact parts of the billwould have on credit unions, such as sharing the cost of the examombudsman with the banking industry. The unprecedented NCUA budgetlanguage would also single out the agency for differentialtreatment and lead to inappropriate political pressure in thebudget process. The NCUA will continue to work with the Committeeto improve the bill.”

Democrats quickly criticized the bill as well. In particular,Ohio Sen. Sherrod Brown, the Senate Banking Committee's top-rankingDemocrat, said the bill's broad-brush regulatory relief approach toDodd-Frank opens the door for big bank relief that could lead toactivities like those that helped fuel recent recession. But thelarger debate is not something that trickles down to the communityfinancial institution section of the bill, according to BradThaler, NAFCU's vice president of legislative affairs.

“We think it's a pretty solid piece of legislation from a creditunion perspective and contains a number of regulatory reliefprovisions we supported,” Thaler said. “We had been working withSen. Shelby and his staff for a while on the credit unionprovisions and we're pleased to see a number them included in thebill.”

The Senate Banking Committee is scheduled to hold a mark-upsession for the bill on May 21.