The endless tide of regulation is taking a heavy toll on creditunions. It is flat out killing some. NAFCU is going full throttlein its fight for credit unions.

Legislative Advocacy

On the hill, NAFCU is seeking to fix what needs to be fixed byour policymakers: Roll back regulation, provide new means forcapital, increase the ability to lend to businesses and promoteregulatory transparency.

Here are a few of the bills where credit unions' concerns arewell-represented:

• S.1484, the Financial Regulatory Improvement Act: A regulatoryrelief bill introduced by Senate Banking Committee Chairman RichardShelby (R-Ala.), it requires the NCUA to hold public budgethearings, indexes arbitrary asset thresholds in Dodd-Frank, raisesthe CFPB examination threshold from $10 billion to $50 billion, andprovides some QM relief for loans held in portfolio.

• H.R. 989, the Capital Access for Small Businesses and Jobs Act:This supplemental capital bill was reintroduced by Reps. Pete King(R-N.Y.) and Brad Sherman (D-Calif.) and continues to gainmomentum. In March, 31 additional cosponsors – Republicans andDemocrats – had signed on.

• H.R. 1188, the Credit Union Small Businesses Jobs Act: Thislegislation recently gained three high-profile cosponsors – HouseFinancial Services Committee Ranking Member Maxine Waters,(D-Calif.), House Small Business Committee Chairman Steve Chabot,(R-Ohio) and House Energy and Commerce Committee Chairman FredUpton, (R-Mich.).

• H.R. 2287, the National Credit Union Transparency Act:Introduced by Reps. Mick Mulvaney (R-S.C.) and Kyrsten Sinema(D-Ariz.), this bill was favorably reported by the House FinancialServices Committee in December and, if enacted, would require theNCUA to hold annual budget hearings. Sens. Heller and Warner have asimilar bill awaiting action.

Regulatory Efforts: The NCUA

NAFCU hears credit unions need ways to reach new members and hasworked with the NCUA on its proposed rule on field of membership.Last November, the NCUA board proposed a rule that would revampfederal credit union chartering and FOM rules. NAFCU is fighting tohave as much as this regulatory proposal finalized as soon aspossible this year.

Just a few months ago, the NCUA board finalized a ruleeliminating the member business lending waiver process and allowingcredit unions to decide if a borrower should be exempt from apersonal guarantee. The NCUA heeded NAFCU's suggestion to expeditethe effective date to 12 months after the rule's finalization,adopting an implementation date of Jan. 1, 2017. Additionally, theNCUA adopted a transitional provision that allowed credit unions togrant an MBL without a personal guarantee beginning May 13, 2016.These changes reduce regulation and allow credit unions to makebusiness decisions for themselves.

Credit unions are also telling us they need relief from the12-month exam cycle. In May, we welcomed NCUA Board Chairman RickMetsger's announcement that in the next two months, the NCUAintends to remove the requirement that all federally insured, statechartered credit unions with more than $250 million in assets beexamined each calendar year. He also announced the formation of aworking group to thoroughly study the examination cycle.

Regulatory Efforts: The CFPB

CFPB Director Richard Cordray has been responsive to concernsover the Truth in Lending Act and Real Estate Settlement ProceduresAct integrated disclosures rule. In March, Cordray said thehold-harmless period related to the bureau's TRID rule will remainopen ended due to the unforeseen information technology problems.Further, Cordray said the CFPB will try to provide more guidance onthe rule and does not expect to take enforcement actions againstnoncompliance unless there are blatant violations.

Earlier this month, the bureau also issued its long-anticipatedproposed rule on payday lending. While the CFPB recognized theNCUA's payday alternative loans program, that's not enough for us.We believe the bureau can do more. We are extremely concerned aboutthe proposal's effect on credit unions' ability to exercisestatutory liens. NAFCU had advocated for the preservation of thePAL program through an express exemption for credit unions. Wecontinue discussions with the bureau and are evaluating theproposed rule for its full impact on credit unions.

Other Regulators

The Department of Defense amended its regulation implementingthe Military Lending Act final rule. The final rule expanded thedefinition of consumer credit to cover a broader range ofclosed-end and open-end credit products. NAFCU continues toadvocate for guidance materials to be issued prior to the Oct. 3,2016 compliance deadline.

In May, the Department of Labor issued its final overtime rule,which goes into effect Dec. 1. NAFCU expressed concern that thisrule could have unwarranted impact on credit unions.

In 2012, the Financial Accounting Standards Board put forth itscurrent expected credit loss model for all nongovernmentalentities. Recently, FASB voted to delay by one year CECL'seffective date for credit unions, as sought by NAFCU, to 2021. Theboard also voted to make certain disclosure requirements in theCECL standard optional for non-public business entities, whichincludes credit unions.

Bottom line, NAFCU will continue to go full throttle to helpcredit unions succeed and promote a positive legislative andregulatory climate where credit unions can thrive. “Bank” is afour-letter word, and we are driven daily to champion the creditunion difference!

B. Dan Berger is president/CEO of NAFCU. Hecan be reached at 703-522-4770 or [email protected].