Legislative Affairs

NASCUS is dedicated to providing focused and incisive advocacy on behalf of the state-chartered credit union system, with a strong voice on Capitol Hill extolling the benefits of the dual charter. NASCUS generally comments only on federal legislation which: affects the dual chartering system, impacts state-chartered credit unions, touches on state-chartered credit union share insurance requirements, or infringes upon state regulatory authority.

WHAT WE ARE FOLLOWING:

HR 6743: Consumer Information Notification Requirement Act

Summary:
Amends the Gramm-Leach-Bliley Act to provide a national standard for financial institution data security and breach notification on behalf of all consumers; would preempt state data breach notification laws. (bill text)

HR 6850: Title to be determined

Summary:
Updates thresholds for certain currency transaction and suspicious activity reports

HR 4861 – “Ensuring Quality Unbiased Actions to Loans Act (EQUAL) of 2018”

Summary:
Bill would require Federal banking agencies to issue regulations, within 24 months of Act’s enactment, to establish standard for short term, small dollar loans made by insured depository institutions. The bill would also exempt insured depository institutions (including credit unions) from the CFPB’s payday lending rule.

HR 4545 – Financial Institutions Examination Fairness and Reform Act
Summary:
Amends the Federal Financial Institutions Examination Council Act of 1978 to:

Set deadlines for final examination reports and exit interviews of a financial institution by a federal financial regulatory agency
Establish the Office of Independent Examination Review to adjudicate appeals and investigate complaints from financial institutions concerning examination reports

Status: Passed House – March 2018.

HR 1 – Tax Reform Bill (No formal title given)

Summary:

Bill amends the Internal Revenue Code (IRC) to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. The legislation contains several provisions pertaining to tax exempt organizations. In particular, those pertaining to unrelated business income taxes (UBIT) and taxation of executive compensation are highlighted below:

Section 13602 – Imposes a 21% excise tax on “excess” executive compensation. This tax would apply annually to compensation (cash and cash value of benefits) in excess of $1 million paid to the five highest paid employees of a tax exempt organization. There are exclusions to compensation designated in the legislation.

Section 13702- Requires tax exempt organization with more than one unrelated trade/business to calculate unrelated business taxable income separately with respect to each trade or business and without regard to a specified deduction that applies for certain unrelated business taxable income.

Section 13703 – Requires that expenses paid or incurred by a tax exempt organization for certain employee fringe benefits are included in the organization’s unrelated business taxable income. “Fringe benefits” under the legislation include transportation, parking facility or any on-premises athletic facility.

Status: Introduced in November 2017; became law 12/22/2017

HR 1824 – Responsibility Addressing the Marijuana Policy Gap Act of 2017

Summary:

Amends the Controlled Substances Act of reduce the gap between Federal/State marijuana policy; Section 204 provides safe harbor protections for financial institutions that provide financial services to marijuana related businesses.

HR 4464 – Common Sense Credit Union Relief Act

Summary

Would repeal NCUA’s Risk-Based Capital Rule

HR 2133 –CLEARR Relief Act

Summary

Regulatory Relief legislation for community financial institutions. Provides an exemption from escrow requirements under TILA for banks w/less than $10 B in assets; provides an exemption from Sarbanes-Oxley annual management assessments of internal controls for banks with less than $1 B in assets; defines “qualified mortgage” as any mortgage originated and retained for at least 3 years by a bank with less than $10 B in assets.

S 2155 “Economic Growth, Regulatory Relief and Consumer Protection Act”

Senate Banking Committee’s major regulatory relief legislation. A “section by section” analysis of the Act can be found here:

(Section-by-section summary of S 2155)

HR 1153 “Mortgage Choice Act of 2017”

Summary:

Amends the Truth in Lending Act (TILA) by modifying the definition of “points and fees” for purposes of determining whether a mortgage can be a “Qualified Mortgage.” The bill excludes taxes and insurance held in escrow and fees paid to affiliated companies that result from their participation in an affiliated business arrangement from the points/fees calculation.

HR 3221 “Securing Access to Affordable Mortgages Act”

Summary:

Amends the Truth in Lending Act (TILA) and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 to exempt from property appraisal requirements a mortgage loan of $250,000 or less if it appears on a loan creditor’s balance sheet for three years. The bill also exempts mortgage lenders and other involved in real estate transactions from incurring penalties for failing to report appraiser misconduct.

HR 3978 “TRID Improvement Act of 2017”

Summary:

Amends the Real Estate Settlement Procedures Act of 1974 to require the CFPB to allow for the calculation of the discounted rate that title insurance companies may provide to consumers when they purchase a lenders/owners title insurance policy simultaneously.

HR 4296 Title to be determined

Summary:

Prohibits the establishment of operational risk capital requirements for banking organizations unless they are sensitive to, and based on, an organization’s current activities, businesses or exposures’ are determined by a forward-looking assessment of an organization’s potential losses and not based soley on its historic losses; and allow for adjustments based on qualifying operational risk mitigants.

HR 3736 – “Risk-Based Capital Study Act of 2017”

Summary: Requires NCUA to conduct a study of the appropriate capital requirements for credit unions

HR 3299 – “Protecting Consumers Access to Credit Act of 2017”

Summary: Amends the Federal Credit Union Act to require the rate of interest on certain loans remain unchanged after the loan have been transferred

HR 2954 – “Home Mortgage Disclosure Adjustment Act”

Summary:

Amends the Home Mortgage Disclosure Act of 1975 to provide an exemption from certain record and disclosure requirements for depository institutions that originated fewer than 1000 closed-end mortgage loans in each of the two preceding years and for depository institutions that originated fewer than 2000 open-end lines of credit in each of the two preceding years.

HR 3971 – “Community Institution Mortgage Relief Act of 2017”

Summary:

Amends the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA) to modify the mortgage loan rules for community financial institutions.

S. 1910 – State Regulatory Representation Clarification Act

Summary:

Legislation that provides for the requirement that the Federal Deposit Insurance Corporation (FDIC) Board of Directors appoint at least one individual with state bank supervisor experience

(*Similar legislation, HR 3915, was introduced on October 3, 2017).

HR 10: Financial CHOICE Act of 2017

(MEMBERS ONLY: See detailed summary/analysis here (member log-in required)

Summary:

The bill revises the Federal Credit Union Act to:

Bring NCUA under the Congressional appropriations process
Require NCUA to publish a draft version of its budget in the Federal Register; hold a public hearing on its budget and accept public comments; respond to public’s comments on its budget

The bill revises the Consumer Financial Protection Act to:

Convert the CFPB into a consumer law enforcement agency
Bring the CFPB under the Congressional appropriations process and Congressional oversight
Eliminate the Bureau’s supervisory authority over financial institutions
Limit the Bureau’s authority to take action against entities for abusive practices

In addition, the bill repeals the Durbin Amendment limitations on fees that may be charges to retailers for debit card processing, among other things.

HR 1009: Office of Information and Regulatory Affairs (OIRA) Insight, Reform and Accountability Act

Summary:

Bill will revise the centralized regulatory review process for the OIRA. OIRA’s review would be expanded to include the “significant regulatory actions” of independent regulatory agencies. However, exclusions from OIRA review are provided to the Government Accountability Office, Federal Election Commission, the governments of the District of Columbia and US territories, and government-owned contractor-operated facilities.

HR 1264: Community Financial Institution Exemption Act

Summary:

Amends the Consumer Financial Protection Act of 2010 to provide an exemption from rules and regulations of the Consumer Financial Protection Bureau for community financial institutions with some exceptions. “Community Financial Institution” is defined as an insured depository institution or credit union with less than $50,000,000,000 in consolidated access.

HR 1244: Capital Access for Small Businesses and Jobs Act

Summary:

Amends the Federal Credit Union Act to clarify the National Credit Union Administration’s authority to improve credit union safety and soundness by allowing the receipt of payments of certain uninsured, nonshare accounts.

Status: Introduced on 2/28/17; no further action.

S. 366/HR 1116 TAILOR Act of 2017

Summary: To require federal financial institutions regulatory agencies to take risk profiles and business models of institutions into account when taking regulatory actions

Status: HR 1116 passed House – March 2018

HR 975 – Respect State Marijuana Laws Act of 2017

Summary: Amends the Controlled Substances Act to provide for a new rule regarding the application of the Act to marijuana. Specifically, the Controlled Substances Act would not apply to any person “acting in compliance with State laws relating to the production, possession, distribution, dispensation, administration or delivery of marihuana.”

HR 924: Financial Institutions Due Process Act of 2017

Summary:

Amends the Federal Financial Institutions Examination Council Act of 1978 to establish a three-judge independent examination review panel. The judges would serve three year terms unless otherwise provided by the Act and would be required to have specific financial industry expertise.

HR 864: Stop Debt Collection Abuse Act of 2017

Summary: Amends the Fair Debt Collection Practices Act to restrict the debt collection practices of certain debt collectors.

H.R. 714: Legitimate Use of Medical Marijuana Act (LUMMA)

Summary: To provide for the legitimate use of medicinal marihuana in accordance with the laws of various States.

HR 715: Compassionate Access Act

Summary: To provide for the rescheduling of marihuana; the medical use of marihuana in accordance with State law; and the exclusion of “cannabidiol” from the definition of marihuana.

S. 223: Senior Safe Act of 2017

Summary: Provides immunity from suit to certain individuals who disclose potential examples of financial exploitation of senior citizens.

HR 3758 – “Senior Safe Act of 2017”

S. 105: CFPB Board Act of 2017

Summary: Amends the Consumer Financial Protection Act of 2010 to transition the Bureau of Consumer Financial Protection leadership to a 5 member Board of Directors.

HR 26: Regulations from the Executive in Need of Scrutiny Act of 2017 (“REINS Act”)

Summary: Amends Chapter 8 of Title 5, United States Code, to provide for congressional review of agency rulemaking. Under the Act, a federal agency promulgating a rule must publish information about the rule in the Federal Register and include in a report to Congress and the GAO the following: (i) a classification of the rule as a “major” or “non-major” rule and (ii) a copy of the cost-benefit analysis taking into account several factors.

A joint resolution of approval must be enacted within 70 session days or legislative days after the agency proposing a “major rule” submits its report on such rule to Congress. A “major rule” is defined as any rule that the “Office of Information and Regulatory Affairs of OMB finds results in (i) an annual effect on the economy of $100 million or more; (ii) a major increase in costs or prices for consumers, individual industries, government agencies, or geographic regions; or (iii) significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of US based enterprises to compete with foreign-based enterprises.

HR 389: Credit Union Residential Loan Parity Act

Summary: To amend the Federal Credit Union Act (FCUA) to exclude a loan secured by a non-owner occupied 1-to-4 family dwelling from the definition of a member business loan and for other purposes.

(09/12/18)

Significant legislative actions, previous Congress (114th Congress)

Significant legislative actions, earlier Congress (113th Congress)

NASCUS’ Key Issues

NCUA Board Reform
The NCUA Board has responsibility for the safe, sound, and effective administration of the credit union share insurance fund, 41% of whose stakeholder credit unions are state-chartered. Given the substantial interaction between the Board and state regulators and the importance of the dual-chartering system to the health and safety of the credit union system, one seat on the NCUA Board should be designated for a candidate who has served as a state credit union supervisor. In addition, the Board should be expanded from three members to five in order to enhance its deliberative process, expand its collective expertise, and improve the efficient administration of NCUA business. These changes to NCUA governance would:

Align with NCUA’s own standards for federal credit union governance (12 U.S.C. 1761(a));
Allow Board members to communicate with each other directly without triggering Sunshine Act requirements (5 U.S.C. 552b);
Streamline supervisory coordination between state and federal regulators and minimize redundancies;
Provide important perspective on the impact of federal regulations on local communities; and
Cost nothing for American taxpayers and require de minimis cost to the credit union system.

The NCUA Board of the Future

NCUA Board Reform Briefing Paper

Statement for the Record to Senate Committee on Banking, Housing, and Urban Affairs Hearing on Regulatory Relief for Community Banks and Credit Unions, February 10, 2015

Supplemental Capital
NASCUS has consistently encouraged NCUA, Congress and others to embrace capital reform for credit unions as a tool for enhancing safety and soundness. As an active member of the Coalition for Credit Union Access, NASCUS has worked tirelessly to build consensus on this issue to ensure that credit unions are given the tools they need to maintain safe capital levels during good and bad economic times.

A capital structure limited exclusively to retained earnings significantly disadvantages credit unions in facing unexpected economic shocks, and penalizes well-run institutions that are simply attracting deposits too quickly. Under the current system, a credit union that has been successful at attracting deposits may find itself in regulatory trouble if its lending does not increase at the same pace as deposits. The new deposits increase the credit union’s assets, which can deplete its net worth ratio and trigger statutory action from regulators. NASCUS is working with NCUA and Congress to pursue all regulatory and legislative solutions.

Supplemental Capital Legislation

Coalition for Credit Union Access

Supplemental Capital Regulation

State Laws

Q&A on Supplemental Capital

2007 Filene Research Study: In a NASCUS supported study, the Filene Research Institute makes the case for expanded sources of credit union capital.

2005 NASCUS White Paper – Alternative Capital for Credit Unions… Why Not?

NASCUS Letters to Capitol Hill

Sept. 13, 2018
Letter opposing H.R. 6743, the Consumer Information Notification Requirement Act

Sept. 14, 2016
Letter supporting OTR transparency bill| (HR 5869)

July 13, 2016
Letter on CHOICE, 5-member NCUA Board

July 22, 2015
Letter to House financial institution subcommittee leaders in advance of July 23 NCUA hearing