With Congress back in session, there is much work to be done. The 114th Congress' agenda is teeming with pending bills and amendments. Therefore, it is extremely important that we use every opportunity to advance credit unions' key issues and the 101 million members we represent.
Legislative Matters
Several bills introduced in Congress relate to regulatory relief and data security, including:
- The Homebuyers Assistance Act (H.R. 3192), introduced by Rep. French Hill (R-Ark.), would provide a temporary safe harbor for lenders from enforcement of integrated disclosure requirements for mortgage loan transactions under the Real Estate Settlement Procedures Act and the Truth in Lending Act through Feb. 1, 2016. Sen. Tim Scott (R-S.C.) introduced S. 1711, legislation that would provide a similar legal safe harbor through Jan. 1, 2016.
- The NCUA Budget Transparency Act (H.R. 2287), introduced by Reps. Mick Mulvaney (R-S.C.) and Kyrsten Sinema (D-Ariz.), would require the NCUA to provide notice of a public hearing on its budget and invite comments. It is the companion bill to S. 924, introduced by Sens. Dean Heller (R-Nev.) and Mark Warner (D-Va.).
- The Risk-Based Capital Study Act of 2015 (H.R. 2769), introduced by Reps. Stephen Fincher (R-Tenn.), Bill Posey (R-Fla.) and Denny Heck (D-Wash.), seeks to compel the NCUA to quantify the necessity, legality and impact of the agency's risk-based capital proposal.
- The Data Security Act of 2015 (H.R. 2205) was introduced by Reps. Randy Neugebauer (R-Texas) and John Carney (D-Del.). The bill would set data protection standards, outline a process for breach notifications and recognize financial institutions' compliance with the Gramm-Leach-Bliley Act. It is the companion bill to S. 961 introduced by Sens. Tom Carper (D-Del.) and Roy Blunt (R-Mo.).
These bills would deliver significant regulatory relief and transparency to credit unions, but they won't progress without substantial support. It is critically important that credit unions – and credit union members – ramp up their own advocacy efforts and urge their U.S. senators and representatives to support these bills and help secure passage. At NAFCU's Congressional Caucus Sept. 14-17, credit union leaders can speak with lawmakers directly about these important issues.
Advocacy efforts yield valuable results. Case in point: On June 29, 2015, President Obama signed into law bill H.R. 1295, the Trade Preferences Extension Act. It included a manager's amendment from House Ways and Means Committee Chairman Paul Ryan (R-Wis.) to section 603 of the Act that preserves current interest reporting on IRS Form 1099 but increases penalties for noncompliance. Without this amendment, credit unions, banks and broker/dealers may have had to report to the IRS their members' and customers' information related to all interest-bearing and non-interest bearing accounts. NAFCU worked diligently with other financial trade groups to get this onerous provision removed.
Regulatory Matters
On the regulatory side, we have also seen much-needed progress this year.
In July, President Obama announced the Department of Defense's finalization of amendments to its Military Lending Act rule. The final rule allows a credit union to list a toll-free telephone number on all consumer credit applications to satisfy oral disclosure requirements and, when this is done, relieves credit unions' burden of checking the Defense Manpower Data Center Database to determine which borrowers must receive MLA oral disclosures. MLA caps the interest rate on covered loans to active duty service members at an all-inclusive 36% Military Annual Percentage Rate, establishes a range of mandatory disclosures that alert servicemembers to their rights and prohibits creditors from engaging in certain predatory practices, among other protections. The effective date is Oct. 1, 2015, though the regulatory compliance deadline is Oct. 3, 2016.
In June, the NCUA Board proposed NAFCU-sought amendments to the agency's member business lending regulation. This proposal is important because credit unions want to provide funding to small businesses that are struggling to find access to capital and liquidity, and are arbitrarily limited by the NCUA's existing regulation.
Through this proposal, the NCUA lifts many of the non-statutorily mandated restrictions from Part 723, while retaining full regulatory and supervisory authority to address safety and soundness concerns on a case-by-case basis. Despite misplaced banker allegations, the NCUA is acting within its statutory authority because Part 723's current prescriptive underwriting criteria are not mandated by the FCU Act, and the proposal does not alter the statutory MBL cap.
Ultimately, we have seen progress, but our legislative and regulatory challenges are far from over. Now is the time to capitalize on the successes we have gained to ensure that we achieve our ultimate goals of regulatory relief for credit unions and national data security standards for retailers.
B. Dan Berger is president/CEO of NAFCU. He can be reached at 703-522-4770 or [email protected].
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