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May 4, 2018

When House comes back to work, could reg relief bill be taken up?

Regulatory relief legislation from the Senate for credit unions and other financial institutions may finally be getting a green light for consideration in the House, perhaps as early as next week when Congress returns from a one-week break (although votes in the House are expected today on at least one non-financial bill).

The reg relief legislation, S.2155 (the “Economic Growth, Regulatory Relief, and Consumer Protection Act,” adopted by the Senate March 14) affects a broad swath of financial institution regulation. Among the specific credit union provisions, the bill would:

  • Require NCUA to annually publish details of and hold a public hearing on its budget, giving credit unions (and others) opportunity to comment;
  • Give credit unions more flexibility in business lending (by exempting one-to-four unit, non-owner occupied residential loans from a credit union’s member business loan (MBL) cap – essentially treating the credit union loans similar to those made by banks);
  • Provide credit unions with regulatory relief from various Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) integrated mortgage disclosure rule provisions.
  • Provide immunity to credit unions (and other financial institutions) and individuals from lawsuits for disclosure of financial exploitation of senior citizens.

However, since passage by the Senate, the legislation has bogged down in the House. Key members there, including House Financial Services Committee Chairman Jeb Hensarling (R-Texas), have expressed a desire to amend the bill with regulatory reform provisions already passed by the House. Senators had warned the House not to send the bill back to the Senate with changes, but to pass it as is and send on to the president to enact into law.

Last week, Hensarling signaled he is now willing to accept the Senate bill – opening the door to (perhaps) swift action on the measure (which President Donald Trump has indicated he would sign). Speaking at a Washington event sponsored by the U.S. Chamber of Commerce, Hensarling last week said he is open to regulatory relief routes that involve passing S. 2155, and then addressing additional regulatory relief in separate legislation. “I’m far more wedded to substance than form, so as I’ve told other people, I’m more than happy to attend multiple signing ceremonies,” Hensarling said.

In the wake of those comments, financial institution trade groups – including those representing credit unions at the national and state levels -- have launched advocacy campaigns urging House members to support the Senate bill. However, no votes have yet been scheduled.


Also expected to come up next week in the House: action to block Bureau of Consumer Financial Protection (BCFP, formerly the CFPB) guidance (now considered a rule) to deter discrimination in auto lending. Last month, the Senate passed legislation (51-47) under the Congressional Review Act (CRA) disapproving 2013 guidance issued by bureau outlining indirect auto lenders’ compliance with fair lending requirements, including caps on interest rates. The guidance was meant, according to the bureau, to combat discrimination in lending.

The 2013 guidance contained the consumer agency’s views on the applicability of federal fair lending laws to “indirect” auto lending (that is, indirect financing facilitated by a car dealer through a third-party lender). More specifically, the guidance outlined indirect auto lenders’ compliance with the fair lending requirements of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B. The bulletin related to policies used by some indirect auto lenders that allow dealers to mark up the interest rate charged to the consumer above the indirect auto lender’s “buy rate.”

According to the bulletin, the lender then compensates the auto dealer based on the difference in interest revenues between the buy rate and the actual rate charged to the consumer in the contract executed with the auto dealer. The bureau stated, in its guidance, that the incentives created by such policies allow for a significant risk for pricing disparities on the basis of race, national origin or other prohibited bases.

Late last year, however, in response to a letter from Sen. Patrick Toomey (R-Pa.), the Government Accountability Office (GAO) found that the guidance was, in fact, a rule – and thus subject to the CRA.

If the House (as expected) passes the Senate’s bill, it will be the first time Congress has successfully used the CRA to block an agency action taken years ago and outside of the time limit provided by law.


The Home Mortgage Disclosure Act (HMDA), and several of the recent “requests for information” prompted by Acting Director Mick Mulvaney in his quest for “evidence” that the agency is working toward its mission, will be on the agenda for the May 17 meeting of the BCFP’s Credit Union Advisory Council (CUAC). The credit union group is one of four councils sponsored by the agency. The other three are: Consumer Advisory Board, Academic Research Council, and the Community Bank Advisory Council. In a notice this week announcing the meeting, the bureau also stated that – on the same day – subcommittees of the credit union group will also be meeting. Those include the CUAC subcommittees on: Card, Payment, and Deposits Markets, Consumer Lending, and Mortgages and Small Business Lending. The credit union council’s meeting is scheduled to run from 9 a.m. to 3 p.m.

Credit Union Advisory Council Meeting


State banking regulators declared neither victory nor conceded defeat in the wake of a federal court’s dismissal of their lawsuit against the OCC’s proposal to issue a “fintech” charter. Monday, the U.S. District Court for the District of Columbia dismissed the lawsuit brought by the Conference of State Bank Supervisors (CSBS) against the OCC. The association had challenged a proposal by the OCC to offer charters that would let so-called fintech companies (firms providing financial services through software or technology, such as via the Internet) do business nationwide.

Judge Dabney Friedrich ruled that since the OCC has not yet reached a final decision on the fintech charters, the claim of harm by the CSBS in its action was speculative. In its lawsuit filed in April 2017, CSBS argued that the OCC’s plan to grant the national charters exceeded the federal banking regulator’s statutory authority and that fintech firms are best regulated by individual states.

In a statement this week, CSBS President and CEO John Ryan noted that states continue to supervise a “vibrant financial services market of banks and nonbanks alike,” promoting access to innovative products while ensuring consumer protection. Indeed, states are actively modernizing financial regulation by moving towards an integrated, 50-state system of licensing and supervision for fintechs and other nonbanks,” Ryan stated.

A fintech charter was first suggested by former Comptroller Thomas Curry, whose term ran out in April 2017. Curry was succeeded by Joseph Otting (in November), who has said he expects his agency in the next two to three months would voice its position about whether a fintech should be able to apply for a bank-like charter. That license, he has said, would allow companies offering online lending and other financial services to operate nationally while adhering to federal banking standards.


A federal court this week blocked efforts to appeal its March ruling vacating the Department of Labor’s fiduciary rule entirely. The action Wednesday by the Fifth U.S. Circuit Court of Appeals in New Orleans essentially may mean the so-called “fiduciary rule” as issued in 2016 is now dead (especially since the Department of Labor declined to file an appeal of the ruling by the April 30 deadline). A group including state attorneys general and the American Association of Retired Persons (AARP) had filed petitions to be granted standing to appeal the decision, which the court refused.

The rule – which imposed a standard of care on broker-dealers and investment advisers that provide investment advice to retirement plan investors, including investment advisory services provided through credit union service organizations (CUSOs) – was voided in March on a 2-1 vote by the Fifth Circuit panel of judges, which called it an “arbitrary exercise of administrative power.”

However, that decision was in opposition to a ruling, also reached in March, by the 10th Circuit Court of Appeals in Denver, which found in favor of the regulation. The DOL announced in March that it would not enforce the rule in any event, given the various court rulings.

In the meantime, the Securities and Exchange Commission (SEC) last month embarked on its own rulemaking process, proposing two new rules and an interpretation to improve investors’ understanding of their relationships with investment advisers and broker-dealers. The new proposals reportedly would represent a different approach from DOL’s rule.


Greg Gonzales, commissioner of the Tennessee Department of Financial Institutions, was reelected chairman of the State Liaison Council (SLC) for the FFIEC; his term runs for one year (from May 1 to April 30 of next year). As chairman, Gonzales also sits on the FFIEC (along with leaders from the Federal Reserve, FDIC, OCC, NCUA and the BCFP.

In addition, Edward “Joe” Face, Commissioner for the Virginia State Corporation Commission’s Bureau of Financial Institutions, has been reappointed to the SLC for a two-year term starting May 1, 2018, and continuing through April 30, 2020. Face is confirmed for the seat by the FFIEC.

The additional members of the SLC are: Mary Hughes, Financial Institutions Bureau Chief of the Idaho Department of Finance, (appointed by NASCUS); Tom Fite, Director, Indiana Department of Financial Institutions, (confirmed by the FFIEC); and Caroline Jones, Commissioner of the Texas Department of Savings and Mortgage Lending, (appointed by the American Council of State Savings Supervisors (ACSSS)).

In a release, FFIEC noted that Gonzales has been active on the SLC since February 2016, when he was designated by the Conference of State Bank Supervisors (CSBS) to complete a partial term vacancy created by the resignation of Lauren Kingry. On April 1 of last year, he was reappointed to serve his first two-year term which runs through March 31, 2019.

Face, the FFIEC stated in another release, has been employed at the Virginia Bureau since 1979 when he began work as an examiner. He has been active in NASCUS over the years, as well as the CSBS.

Gonzales Elected as State Liaison Committee Chairman

Face Re-Appointed to FFIEC State Liaison Committee


NCUA said this week it was moving its July meeting by one week – to the first week of August, a month the board has typically skipped in its meeting schedule. The agency made the announcement in a press release; no reason was given for the change from July 26 to Aug. 2 (although the agency typically notes that its board meeting schedule is “subject to change”). For many years, the board has opted not to schedule a meeting in August of each year but has met in the other 11 months. Over the past seven years or so, it has only missed one meeting other than in August (in March 2017). The Aug. 2 meeting is scheduled to begin at 10 a.m.

NCUA Board Revises 2018 Meeting Schedule


Nominations for the 2018 Pierre Jay Award are now open, with a deadline of June 25. The honor is presented annually by NASCUS to an individual, program or organization which is making or has made significant contributions to the state credit union system. In 2017, the award was presented to retired Vystar Credit Union (of Jacksonville, Fla.) President and CEO Terry West. A 35-year veteran of the credit union system, West led the credit union to extensive local and community service, while also serving the state credit union system at the national level in a variety of positions with industry and advocacy groups (most recently as member of the NASCUS Credit Union Advisory Council).

Eligibility for nomination to the 2018 Pierre Jay Award is open to anyone, program or organization that has made a significant contribution to the state credit union system over the last year (or years); the nominee does not necessarily have to be affiliated with NASCUS. Nominees could include credit union regulators, practitioners (paid staff, volunteers or members) federal or state lawmakers, trade groups or others. Only NASCUS members are eligible to submit a nomination for consideration.

More information/nomination form, 2018 Pierre Jay Award

BRIEFLY: Mortgage symposium, WA examiners school upcoming this month; (bank examiner opening in R.I.)

Two key NASCUS events are upcoming this month: The Washington Examiners School (May 14-16 in Seattle), and the NASCUS Mortgage Symposium (May 31 in Newton, Mass.). The examiners school (like at least three more are scheduled throughout the year) offer state examiners and credit union staff a complete look at the changing regulatory environment, with a thorough run-down of the impact on federally insured, state-chartered credit unions from new or proposed federal regulations. The Mortgage Symposium provides a high-level overview on topics such as secondary market resources on servicing right valuation and secondary market gain on sales strategies, compensation and profitability issues. For details and registration, see the links below … and don’t forget the 2018 NASCUS State System Summit, coming up July 16-19 at the Disney Yacht and Beach Club in Orlando, Fla.

May 14-16: WA Examiners School (Seattle, WA)

May 31: NASCUS Mortgage Symposium

July 16-19: NASCUS 2018 State System Summit


Information Contact:
Patrick Keefe,