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May 5, 2017

CHOICE Act heads to House floor

After two full days of committee mark-up debate, the sweeping regulatory reform legislation known as the Financial CHOICE Act (H.R. 10) was adopted by the House Financial Services Committee Thursday, on a vote of 34-26 (along partisan lines).The legislation – which is largely aimed at dismantling parts of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act -- includes NASCUS-supported provisions: more transparency in the NCUA budgeting process (including through public hearings), and for the overhead transfer rate (OTR).

The bill also contains a so-called “off-ramp” provision allowing financial institutions, including credit unions, which maintain an average leverage ratio of at least 10% the option to be exempt from federal capital and liquidity requirements. The institutions, if they apply for the exemption and receive it, would be defined as “qualifying banking organizations” (QBOs) in the CHOICE Act. Other provisions in the legislation would:

  • Repeal the so-called “Durbin amendment” which regulates the fees financial institutions may charge for “interchange” on debit card transactions;
  • Require federal regulatory agencies to improve their cost-benefit analyses and better tailor regulations to the size of regulated institutions;
  • Create an independent ombudsman and examination appeals procedures for the federal financial institution examinations process;
  • Change the name of the CFPB to the “Consumer Law Enforcement Agency” (CLEA) and refocus the agency to consumer protection and competitive markets (among other things);
  • Repeal CFPB’s (“CLEA” under the bill) Unfair, Deceptive, and Abusive Acts and Practices (UDAAP) authority, and preserve federal banking regulators’ Unfair Deceptive Acts and Practices (UDAP) authority;
  • Bring a number of independent federal agencies – including NCUA, CFPB, FDIC and the Federal Reserve – under the congressional appropriations process;
  • And include several provisions aimed at improving federal mortgage lending laws and regulations.

The bill now heads to the House floor for consideration; no timetable for a vote has been set. The House goes out for a one-week recess after Thursday, scheduled to return May 16.


Medical marijuana will continue to be out of reach of Justice Department interference – at least until this fall -- as part of the spending package compromise agreed to in Congress this week. President Donald Trump is expected to sign the bipartisan $1.1 trillion measure, designed to keep the federal government open and operating until September. The spending bill (approved by the House Wednesday and the Senate Thursday) extends an existing provision that blocks the Department of Justice from interfering with medical marijuana companies in states that have legalized the drug for medicinal purposes. The existing provisions expired with the previous government funding bill, which ended last Friday. The medical marijuana budget provision originally passed Congress in 2014, but must be renewed each year in the government spending bill.

In other provisions, the spending bill:

  • Calls on the Federal Communications Commission to revisit its 2015 Telephone Consumer Protection Act (TCPA) order, and to address technical questions difficult for financial institutions to resolve (such as clarifying whether an exemption for financial institutions to contact consumers with additional information can actually be used). The provision also urges the FCC to provide more flexibility to the requirements.
  • Directs the Office of Critical Infrastructure Protection and Compliance Policy to report to several Congressional committees about how to improve cybersecurity, and an update on collaboration across the financial services sector within 60 days of the bill’s enactment.
  • Urges CFPB to “carefully balance” the existing regulatory frameworks in states and the need to provide consumers with access to a range of short-term financial services products, and to take into consideration successful state models that have encouraged “fair and transparent” lending practices without restricting access to credit.

NASCUS Summary: Telephone Consumer Protection Act – FCC Rules

NASCUS/CUNA 2017 Cybersecurity Symposium, June 5-6 (San Diego)


Capital talking pointsComments on the alternative capital “advance notice of proposed rulemaking” (ANPR) are due Tuesday (May 9), and NASCUS is putting the final touches on its views through a comment letter about the proposal. The ANPR, issued in January, would change the secondary capital regulation for low income-designated credit unions (the only credit unions the FCU law allows to have the secondary capital), and authorize other credit unions to issue supplemental capital instruments that would only count toward their risk-based net worth requirements. On Tuesday, the association’s Legislative and Regulatory Committee met by telephone conference to consider final adjustments to its comment letter on the subject.

Also during the teleconference, NASCUS released a template letter for credit unions to consider referring to when drafting their own comment letters on the ANPR. Key points contained in the letter for credit unions to consider include:

  • Access to supplemental capital is an important tool for healthy, well-managed credit unions to meet the demands of their members and their communities for affordable financial services.
  • Providing credit unions access to supplemental capital for risk-based capital purposes would enhance the safety and soundness of the credit union system.
  • Any supplemental capital rules ultimately adopted by the agency must be guided by safeguards that reflect the unique nature of credit unions as not-for-profit financial cooperatives.
  • Any final rule adopted should establish first principles and broad parameters, while ensuring that the NCUA Board has advance approval authority over credit union plans to offer specific instruments.
  • There are many complex issues related to the proposal; rather than tackle those in this rule, the agency should address them in separate rulemaking processes.

(Click on the image above for a quick video about the points)

“Credit unions should consider these points and their own letters by next week,” said NASCUS President and CEO Lucy Ito. “As we said early this year: this proposal holds the potential for synchronizing federal rules with existing authorities already on the books for credit unions in 15 states. Credit unions should have access to the tools they need to maintain safe capital levels during good and bad economic times.”

Template letter for developing comments on alt. capital ANPR


The presence of a body of water in a geographic area does not preclude the area from satisfying the definition of “contiguous” in the rural district provisions of the NCUA Chartering Manual, according to a recent opinion letter by the agency. In the letter, NCUA General Counsel Michael J. McKenna addressed the question of whether the agency would consider several Hawaiian Islands contiguous for purposes of NCUA's rural district regulation, despite the islands being separated by a body of water.  “The FCU Act does not define ‘rural district,’ thereby granting NCUA the broad authority to do so as the agency determines is appropriate,” McKenna wrote in the legal opinion letter, dated March 31. “There is nothing in NCUA’s definition of ‘rural district’ to suggest that the presence of a body of water precludes the existence of a rural district. The composition of the subject geographic area is unique, rural in nature, and, despite the body of water, some of the islands are part of the same county,” he wrote.

NCUA legal opinion letter 17-0406; Contiguous geographic boundaries


Keith Noreika, a Washington attorney, is serving as interim Comptroller of the Currency after Thomas J. Curry stepped down today. The Treasury Department announced the interim appointment this week; Curry had been serving in the position since his five-year term ended last month. Noreika is a partner with the firm Simpson Thacher in its Washington, D.C. office. According to his biography on the firm’s website, Noreika is a member of the firm’s financial institutions practice. Curry, 60, who has served as comptroller since 2012 reportedly plans return to the Boston area; he previously served as commissioner of the Massachusetts Division of Banks.

According to Noreika’s website bio information, he has advised domestic and international financial institutions on regulatory issues for nearly 20 years, working for most of those years at the law firm Covington & Burling. Additionally, the bio notes that Noreika has represented large national banks before the U.S. Supreme Court, the U.S. Courts of Appeals and the U.S. District Courts in connection with “federal preemption challenges to states’ assertions of regulatory and supervisory authority over the activities of operating subsidiaries.”


Tennessee’s Greg Gonzales is now the chairman of the State Liaison Council (SLC) of the Federal Financial Institutions Examination Council (FFIEC), as a result of elections by the council members. In a press release, the FFIEC announced the results of the election, in which Gonzales – commissioner of the Tennessee Department of Financial Institutions – was elected to the one-year term as SLC chairman. His term runs until April 30, 2018. According to the FFIEC, the SLC may re-elect the chairman for additional terms. Gonzales has served as Tennessee commissioner since 2005. He serves as the state’s chief regulatory officer of all state-chartered depository and licensed non-depository financial institutions. He has served on the SLC since February, 2016.

Other members of the five-member SLC are: Mary Hughes, financial institutions bureau chief of the Idaho Department of Finance (appointed by NASCUS); Joe Face, commissioner of financial institutions for the Virginia State Corporation Commission’s Bureau of Financial Institutions; Caroline Jones, commissioner of the Texas Department of Savings and Mortgage Lending. The appointment of Judi Stork, deputy bank commissioner, Kansas Office of the State Bank Commissioner, to the fifth seat on the council was also announced this week by the SLC. Stork was appointed to a two-year term starting May 1, 2017, and continuing through April 30, 2019.

AROUND THE STATES: AL bill sets up 18-mo. exam cycle; DE OKs prize-linked savings

Alabama legislation that extends the exam cycle to 18 months for well-run credit unions has been sent to Gov. Kay Ivey (R) for her signature. The measure gives the Alabama Credit Union Administration the ability to exam healthy credit unions on an 18-month cycle as opposed to the current statutory requirement of 12-months … Delaware Gov. John Carney (D) signed a bill into law allowing credit unions and other financial institutions to offer cash prizes to savers who make regular deposits into their accounts. According to the NASCUS State System Profile, there are now 20 states offering prize-linked savings programs.

BRIEFLY: NCUA consulting aid deadline; $5.1B recovered; Senate version of CLEARR

Qualified credit unions interested in applying for consulting assistance from NCUA have until May 31 to submit nominations, the agency said this week, by completing the agency’s online application form. To qualify, a credit union must meet one of: total assets of less than $100 million; chartered for fewer than 10 years; designated as a Minority Depository Institution, or; Have a low-income designation from NCUA … Legal recoveries have reached $5.1 billion on behalf of five failed corporate credit unions that purchased residential mortgage-backed securities, NCUA announced this week, including $400 million from Credit Suisse for claims arising from losses related to purchases of residential mortgage-backed securities by U.S. Central Federal Credit Union, Southwest Corporate Federal Credit Union, and Western Corporate Federal Credit Union … A Senate version of the “CLEARR” Act has been introduced by Jerry Moran (R-Kansas), serving as a companion to House legislation dropped last week (H.R. 2133). Sen. Jon Tester, D-Mont., is the lead Democrat on the bill. The Senate version of the “Community Lending Enhancement and Regulatory Relief” Act (S.1002) is intended, like the House bill, to provide regulatory relief for credit unions and other small financial institutions, particularly with regard to mortgage lending.

NCUA online application form/consulting assistance

Information Contact:
Patrick Keefe, NASCUS Communications, or (703) 528-5974