With another slate of regulations expected this year, keen vigilance will be needed to ensure against unintended consequences that negatively impact credit unions. Since the implementation of the Dodd-Frank Act in 2010, we have lost over 1,000 credit unions. In the past year, we lost over 270 credit unions.
Last year, NAFCU was steadfast in drawing attention to credit unions' overwhelming regulatory burden and championed "enough is enough" to lawmakers and regulators and we netted some notable successes. Now, with a new Congress beginning and numerous new faces in the House and Senate, our work to ensure credit unions' best interests – the flexibility and resources they need to serve members – begins anew.
In 2014, we welcomed several legislative wins that supported key aspects of NAFCU's five-point plan for regulatory relief for credit unions. President Obama signed into law H.R. 3468, the Credit Union Share Insurance Fund Parity Act, giving credit unions parity with FDIC-insured institutions offering escrow accounts like Interest on Lawyer Trust Accounts.
The NCUA issued a final rule changing its rules on appraisals and a proposal to remove the 5% cap on federal credit union investments in fixed assets. Both are on NAFCU's "Dirty Dozen" list of regulations that need to be updated or eliminated.
We also saw progress on flood insurance regulation with enactment of the 2014 Homeowner Flood Insurance Affordability Act, which delayed increases in flood insurance premiums that were part of the 2012 Biggert-Waters Flood Insurance Reform Act.
Throughout the 114th Congress, preserving the credit union federal tax exemption will remain NAFCU's top priority. We will continue to monitor tax reform discussions for any impact and will continue to advance the value credit unions deliver to the nation's economy.
Housing finance reform continues to be discussed by Congress and the administration, and it is uncertain what government-sponsored enterprises Fannie Mae and Freddie Mac will look like under a new system. NAFCU has been advocating for unfettered, guaranteed access for credit unions to the secondary market and fair pricing for credit union mortgages based on loan quality, not volume.
Additionally, we continue to press Congress to establish national data security and breach notification standards for retailers. NAFCU was the first financial trade organization to call for national data security standards for retailers, and we will continue to urge Congress to hold retailers accountable for losses caused by their own negligence. We are also pushing for a bipartisan, bicameral working group in Congress to find a legislative solution.
After much scrutiny from NAFCU, credit unions and lawmakers, the NCUA is expected to issue its second risk-based capital proposal early this year. Though we expect to see significant improvements, we still believe the NCUA lacks the legal authority to promulgate many aspects of the first proposal, including imposition of individual minimum capital requirements. NAFCU supports a legislative solution to update credit union regulatory capital requirements without requiring some credit unions to shoulder a disproportionate amount of the burden as the current proposal would do.
Also on the radar screen is the field of membership issue. We believe the NCUA can provide federal credit unions much-needed flexibility through revisions to existing rules and should work to strengthen the federal charter.
The Department of Defense's proposed rule amending its Military Lending Act requirements is also sure to garner attention. The proposal's broad definition of consumer credit will create an extra burden for credit unions that offers any unsecured credit under the proposed requirement for financial institutions to identify service members.
NAFCU has warned DoD this proposed rule would be so burdensome that credit unions could no longer provide some products to service members. We asked that credit unions be exempted from the proposal and allowed to continue under existing MLA regulations.
The Consumer Financial Protection Bureau has also outlined a number of issues for 2015. Credit unions are particularly concerned about CFPB's inclusion of overdraft protection on its semi-annual regulatory agenda. We will continue to engage with CFPB as it studies the overdraft space and proposed rulemaking on it.
In 2015, NAFCU will continue to work with Congress, the administration and regulators to advance regulatory relief for credit unions. In our consolidating industry, regulatory relief is not a luxury, it is a necessity.
B. Dan Berger is president/CEO of NAFCU. He can be reached at 703-522-4770 or [email protected].
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