CU Trades: Economic Impact Payments Will Cause Headaches at Credit Unions
Balance sheet management is a huge issue for credit unions and the NCUA must provide tools to help them cope.
The forthcoming coronavirus economic impact payments will help credit union members weather the pandemic, but they may cause regulatory headaches, credit union trade groups warned.
As the payments are deposited into members’ accounts, some credit unions will see a huge increase in their balance sheets — potentially triggering new regulatory requirements, CUNA President/CEO Jim Nussle wrote in a letter to NCUA board members.
Balance sheet management is a huge issue for some credit unions and the NCUA must provide institutions with the needed tools to cope with the issue, Carrie Hunt, NAFCU’s EVP of government affairs and general counsel, said.
President Trump on Sunday signed legislation authorizing $600 economic impact payments for most taxpayers. The House passed legislation Monday night increasing that amount to $2,000, but on Tuesday afternoon, Senate Majority Leader Mitch McConnell (R-Ky.) blocked a first attempt to bring up that measure.
Nussle said federal banking agencies have passed an interim final rule that will, under certain circumstances, allow banks to use the asset data they reported on Dec. 31, 2019, for regulatory purposes.
The NCUA should do the same for credit unions, Nussle said in his letter. He added that under the rule, credit unions would not be required to comply with new regulatory or reporting requirements until the beginning of 2022, at the earliest.
“This regulatory relief would apply to asset-based regulatory thresholds for requirements such as debit card interchange fees and routing, and eligibility for 18-month examinations, among other asset-based requirements.” he wrote.
On a separate note, NAFCU officials said they have shared concerns with federal agencies about how best to “facilitate safe and fast access to these critical funds.”
The legislation authorizing the new payments to taxpayers did solve one problem that was noted when similar payments were approved earlier this year. The new legislation specifically states that the economic impact payments are not subject to garnishment.
“That’s an important clarification,” Hunt said.
Credit union and banking trade groups had asked for that clarification, saying that in some cases, they had no choice but to allow court-ordered garnishment of the payments.