Washington - The National Association of Federal Credit Unions (NAFCU) today reiterated its call for Congress to provide broad-based regulatory relief to the nation’s credit unions, outlining a five-point plan that would provide administrative, capital, structural, operational and data security reforms.
“Credit unions are well-managed, well-run institutions that did not engage in the practices that led to the financial crisis. Yet, the regulatory burden on our nation’s credit unions has reached epic proportions and that must be addressed immediately,” said Fred Becker, NAFCU president and CEO. “NAFCU’s five-point plan provides a solid framework for providing broad based meaningful relief that will reduce the crushing regulatory burden on all credit unions.”
In its letter, NAFCU made the following specific recommendations as part of its five-point plan:
Administrative Improvements to the National Credit Union Administration (NCUA)
- Allow a federal credit union to petition NCUA for a waiver in favor of a state rule.
- Provide NCUA the authority to delay implementation of CFPB rules that affect credit unions and to tailor those rules for credit unions’ unique structure.
- Require a cost/benefit analysis of all rules that includes a three-year look back and reevaluation of rules that cost 20 percent or more than their original cost estimate.
- Enact new examination fairness provisions to help ensure timeliness, clear guidance and an independent appeal process free of examiner retaliation.
- Improve the Central Liquidity Facility by removing the subscription requirement for membership and permanently removing the borrowing cap.
Capital Reforms
- Direct NCUA to, along with industry representatives, conduct a study on prompt corrective action, and recommend changes.
- Modernize capital standards to allow supplemental capital; and direct the NCUA Board to design a risk-based capital regime for credit unions that takes into account material risks.
- Establish special capital requirements for newly chartered federal credit unions that recognize the unique nature and challenges of starting a new credit union.
Structural Improvements
- Direct NCUA, with input from the industry, to conduct a study of outdated corporate governance provisions in the Federal Credit Union Act and make recommended changes to Congress.
- Improve the process for expanding a federal credit union’s field of membership by allowing voluntary mergers among multiple common bond credit unions, easing the community charter conversion process and making it easier to include those designated as “underserved” within a credit union’s field of membership.
Operational Improvements
- Raise the arbitrary cap on member business loans to 27.5 percent or raise the exemption on MBL loans from $50,000 to $250,000, adjusted for inflation, and exempt loans made to non-profit religious organizations, businesses with fewer than 20 employees and businesses in “underserved areas.”
- Remove requirements to mail redundant and unnecessary privacy notices on an annual basis, if the policy has not changed and new sharing has not begun since the last distribution of the notice.
- Allow credit unions greater authority and flexibility in how they invest.
- Provide NCUA the authority to establish longer maturities for certain credit union loans and greater flexibility in responding to market conditions.
- Provide federal share insurance coverage for Interest on Lawyers Trust Accounts (IOLTAs).
Data Security Reforms
- Establish national standards for safekeeping of all financial information.
- Establish enforcement standards for data security that prohibit merchants from retaining financial data, and require merchants to disclose their data security policies to customers.
- Hold merchants accountable for the costs of a data breach, especially when it was due to their own negligence; shift the burden of proof in data breach cases to the party that incurred a breach; and require timely disclosures in the event of a breach.
“For the last year, NAFCU has engaged in numerous meetings and discussions with our members, congressional leaders and regulators,” said Becker. “The number of credit unions continues to decline as the regulatory burden accelerates and the compliance costs become more onerous. NAFCU looks forward to working with the National Credit Union Administration, Congress, and our industry to move these critical and much-needed reforms forward in this session of the 113th Congress.”
To read NAFCU’s letter, visit www.nafcu.org/regrelief.
About Us:
The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.