Credit Union National Association (CUNA) sent a comprehensive letter to House Financial Services (HFSC) Committee Chairwoman Maxine Waters and Ranking Member Patrick McHenry, supporting three pieces of legislation under consideration, calling on the National Credit Union Administration (NCUA) to remain flexible in its approach to credit unions impacted by the COVID-19 pandemic and addressing banker inaccuracies against credit union-bank mergers.
Expanding access to services
Among the legislative proposals under consideration, CUNA supports the Expanding Financial Access for Underserved Communities Act, the Central Liquidity Facility (CLF) Enhancement Act, and the Resolution of Disapproval on the OCC’s National Banks and Federal Savings Associations as Lenders Final Rule.
“Any serious discussion of policy remedies to address access to financial services to underserved or unbanked persons, businesses and communities must include breaking down barriers in law and regulation that keep credit unions from being part of the solution,” CUNA President/CEO Jim Nussle said of the Expanding Financial Access for Underserved Communities Act.
The NCUA Board has two outstanding rulemakings: the Capitalization of Interest in Connection with Loan Workouts and Modifications proposal, and the Transition to the Current Expected Credit Loss Methodology proposal. CUNA is urging the NCUA to quickly finalize these proposals as the current regulation complicates loan modifications and workouts for consumers facing financial distress amid the pandemic.
Modernizing the Federal Credit Union Act
CUNA called on Congress to consider additional changes to the Federal Credit Union Act (FCUA) to keep pace with technology and how consumers access financial services. The Expanding Access to Lending Options Act, for example, would raise federal credit union loan maturity limits on non-mortgage loans from 15 to 20 years. Eliminating outdated restrictions on lending maturity limits could also affect student lending by providing student borrowers across the country with more opportunities for education that is more affordable both in the short and long term.
Additional FCUA changes discussed include permitting credit unions to establish their own fiscal year, removing outdated responsibilities of board of directors, and ensuring credit unions have the ability to protect members and employees.
Prompt corrective action flexibility
CUNA also seeks accommodations for capital requirements which have compromised the health of credit unions impacted by stimulus payments and other deposit influxes.
“Otherwise healthy credit unions should not be forced to reserve extra to accommodate rigid statutory and regulatory capital requirements when their capital declines as a result of natural disaster, pandemic or other external crisis; they should be able to continue to serve their members and help them weather the storm,” Nussle added.
Bank sales benefit consumers
CUNA defended bank sales to credit unions amid concerns from banking trades that question the viability of the transactions, which are relatively infrequent. Nussle acknowledged that banking deserts have been created by banks leaving the marketplace. Since 2004, banks have closed over 6,000 branches and credit unions have opened a net 1,600 branches.
“When a bank sells to a credit union, the community is the winner: a potential banking desert is prevented, and the community continues to receive locally provided financial services but now in the form of a member-owned credit union,” Nussle said.