Trade Leaders Reflect on Trump

Nussle: The Trump Administration was receptive to working with CUNA and the leagues to remove barriers for credit unions, enabling us to better serve consumers and businesses. They rightly recognized that regulatory burden subjects credit union members to higher loan rates, fewer services and products, and delayed access to modern technology.

Perhaps the best example of cooperation between the Trump Administration and the credit union system was the enactment of the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155). This bipartisan legislation led to several regulatory relief provisions, most notably one that would grant credit unions relief on the member business lending cap.

Berger: NAFCU has had a very good relationship with the Trump Administration. The administration has been receptive to the needs of credit unions, committed to a deregulatory agenda and issued executive orders that have reduced onerous regulations and controlled regulatory costs. NAFCU has had a strong and positive working relationship with President Trump, NCUA Chairman Rodney Hood and the administration at-large. They have been strong partners over the past four years.

Ito: The Trump White House has been comparable to many previous administrations in taking time to fill open and expired NCUA board seats. This has been the rule rather than the exception over the last several administrations as each new administration needs time to complete its transition.

CU Times: Trump appointed a lot of bankers to various positions and had meetings with bankers that credit union officials were not invited to attend. Did the White House neglect credit unions?

Nussle: Absolutely not. The president met with credit unions. The vice president spoke at the CUNA GAC. We had more meetings at the White House in the last four years than we did in the previous 12 years combined. We were able to engage the White House frequently and at high levels.

We appreciated every chance we had to engage with the president and his team. Whether it was amplifying credit union concerns throughout the pandemic, discussing regulatory and institutional hurdles, or any number of other credit union concerns, they were very open to hearing what we had to say and to working with us to get to yes on several issues.

Berger: The Trump Administration has been very supportive of credit unions’ efforts to serve our local communities and their 123 million members, and this has been a positive four years for credit unions. Members of President Trump’s team have attended our Annual Congressional Caucus event each year. We have also met directly with President Trump inside the oval office for the signing of the CFPB’s arbitration rule repeal and coordinated a meeting between the president and NAFCU member CEOs. This is in addition to the dozens of meetings NAFCU has held with the president’s cabinet members and regulatory agency heads.

Ito: What is true is that the Trump Administration has made efforts to bring the membership of the NCUA board to its full complement of three members. That’s an important step in maintaining forward motion in federal regulatory developments for credit unions (which has an impact on the state system). For example, President Trump filled both open and expired seats in 2019 by simultaneously appointing two highly qualified individuals, Rodney Hood and Todd Harper, both of whom were already well-versed in credit unions and the broader financial services market. As I observed when the NCUA board was back at full strength in April 2019, the varied and complementary backgrounds of then Chairman Mark McWatters and Board Members Hood and Harper made for one of the most qualified boards in NCUA history. Most recently, along the lines of keeping the board at its full membership, the president appointed Kyle Hauptman to fill the seat held by Mark McWatters, whose term had expired.

CU Times: What decision was made by the administration that will have the most positive impact on credit unions going forward?

Nussle: President Trump and his team really took to heart that one-size-fits-all regulations simply do not work and saw clearly that policies should be tailored to fit Main Street institutions like credit unions that are providing access to credit and supporting members’ financial well-being.

Getting [S. 2155] through Congress was a historic advocacy achievement for the credit union system. Credit unions made their voices heard wherever possible – from meetings with lawmakers and staff to testimonies before congressional committees and letters to the editor, it was the definition of the 360-degree advocacy that credit unions are respected for.

Berger: The credit union tax exemption was preserved and protected from an endless barrage of baseless banker attacks as well as the administration’s support of a deregulatory environment. This speaks to the strength of our advocacy efforts as well as the support credit unions have had throughout Congress and the administration.

Ito: Early in his administration, President Trump issued Executive Order No. 13777 – “Enforcing the Regulatory Reform Agenda (RRA)” establishing the policy of alleviating unnecessary regulatory burdens. Though not strictly bound by the order as an independent regulatory agency, the NCUA adopted its own RRA, which included two sets of recommendations that could have a lasting impact on the credit union system. Recommended reforms included the co-location of several related but dispersed provisions of the NCUA’s rules with the goal of providing greater clarity and consistency. If these rule reforms are extended to their logical completion, the NCUA could provide substantial regulatory relief to federally-insured, state-chartered credit unions (and both the NCUA and state examiners) by co-locating and combining all share insurance rules in one section of its rules and regulations.

Second, among the NCUA’s RRA recommendations was capital reform – namely the enhancement of LICU secondary capital rules and the establishment of supplemental capital in conjunction with risk-based capital rulemaking. With the NCUA’s subordinated debt proposed rule … the NCUA has the opportunity to address one of the most significant and long sought regulatory relief opportunities for credit unions. Such capital reform would give qualified credit unions a critical tool to manage their net worth ratios in unusual circumstances, such as those credit unions are now experiencing in 2020 – the sudden surge in deposits as a collateral effect of government and consumer reaction to the global COVID-19 pandemic.

CU Times: What would you like the administration to have done that it has not done?

Nussle: The Trump Administration and Congress still has time to extend the CARES Act to ensure that relief proposals continue to allow credit unions to best serve their members during and after the COVID-19 crisis. CUNA continues to advocate for the extension of provisions providing Troubled Debt Restructuring (TDR) and Central Liquidity Facility (CLF) relief, as well as for further adjustments to the Paycheck Protection Program. We hope they will help us be there for Main Street now more than ever.

Additionally, we still believe that the CFPB’s single director structure should be replaced with a five-person, bipartisan commission. The current single director structure, as we will once again witness in the transition of CFPB leadership from the Trump Administration to the Biden Administration, leads to significant uncertainty within the financial services industry. This uncertainty is negatively impacting America’s consumers, small businesses and our local economies.

Berger: The coronavirus pandemic has tested our nation in many ways, and small businesses are fighting tooth and nail to remain financially stable during these uncertain times. We believe deeply in the need to lift the member business lending cap on credit unions so they can better assist our nation’s businesses and local communities to get from crisis to recovery intact.

Ito: While this would first require Congress to pass legislation amending the Federal Credit Union Act, NASCUS would like to see any administration sign into law legislation expanding the NCUA board from three to five members with one seat designated for an individual with state credit union regulatory experience. The state credit union system represents fully 50% of total national credit union assets. With the NCUA’s role as the prudential regulator for federal credit unions in addition to its insurance role, the state system is woefully under-represented in the NCUA’s current governance structure.

CU Times: Looking back, how do you think the Trump Administration will be remembered as far as credit unions are concerned?

Nussle: The Trump Administration will be remembered for the tone it set and effect it had on reducing regulatory burden. The actions taken by the CFPB, NCUA and other agencies helped right-set the regulatory regime that credit unions follow, enabling them to serve their members more efficiently.

Berger: The Trump Administration will be remembered for ushering in major financial reforms and relief efforts by way of bipartisan S. 2155 that helped credit unions grow stronger.

Ito: It’s very likely that credit unions (and others among financial institutions) will remember the administration’s ongoing efforts to reduce regulatory burden on their operations and the emphasis on encouraging innovation in providing financial services.