NAFCU to Senate Banking: Regulatory relief is needed for credit unions

WASHINGTON, DC (June 8, 2017)Steve Grooms, president and CEO of 1st Liberty Federal Credit Union (Great Falls, M.T.), will testify today on behalf of the National Association of Federally-Insured Credit Unions (NAFCU) before the Senate Banking Committee on the importance of regulatory relief for credit unions and the economic benefits credit unions offer.

Grooms is testifying before the committee in today’s hearing, “Fostering Economic Growth: The Role of Financial Institutions in Local Communities,” which begins at 10 a.m. Eastern.

In his testimony, Grooms discusses the growing compliance burden credit unions have faced within recent years. “The growing regulatory burden on credit unions was demonstrated by a recent NAFCU survey of our membership that found that nearly 97% of respondents were spending more time on regulatory compliance issues than they did in 2009,” he says in prepared his prepared testimony.

As to the impact on his credit union, Grooms says, “At 1st Liberty, we conservatively estimate that our compliance costs have increased by over $350,000 since 2009. While that may not seem like a lot to Washington bureaucrats, it is a lot in Great Falls, Montana. These costs come from hiring new compliance employees, dealing with third-party vendors, increased software costs, as well as time and training for our staff. As regulation increases compliance costs, smaller credit unions like mine are having an increasingly difficult time surviving.”

Grooms also points to the declining number of small credit unions since the enactment of the Dodd-Frank Act. “The impact of the growing compliance burden is evident in the declining number of credit unions. Since the second quarter of 2010, we have lost more than 1,500 federally-insured credit unions – over 20% of the industry. The overwhelming majority of these were smaller institutions below $100 million in assets. While it is true that there has been a historical consolidation trend in the industry, the passage of the Dodd-Frank Act has accelerated this trend.”

In addition, Grooms urges the committee to support repeal of the Durbin interchange amendment, as it has negatively impacted credit unions and their members. “The interchange price caps passed as part of the Dodd-Frank Act have failed to produce the consumer benefits that proponents promised. This provision has essentially been a windfall to merchants and their stockholders, while costing credit unions and their members billions of dollars that could have been used to help foster economic growth through better rates and more loans,” he says. “We urge you to repeal the debit interchange provision found in the Dodd-Frank Act and protect community financial institutions from future harm by opposing any efforts to expand the Durbin price controls to credit interchange.”

Grooms’ suggestions for easing credit unions’ regulatory burden include, among other things, improving the National Credit Union Administration’s (NCUA) field-of-membership rules. “While NCUA has taken recent steps on the regulatory side, NAFCU believes there should be improvements to the Federal Credit Union Act to help enhance the federal credit union charter,” he says. “First, a series of improvements should be made to the field of membership (FOM) restrictions that credit unions face expanding the criteria for defining ‘urban’ and ‘rural.'”

He reiterates NAFCU’s support for having NCUA serve as the sole federal regulatory agency for credit unions and urges credit unions’ exemption from CFPB rulemaking, stating, “NAFCU strongly believes that credit unions should be exempt from CFPB regulation and supervision, with that authority for all credit unions returned to the National Credit Union Administration.”

Grooms concludes, “If Congress wants to help foster economic growth, enacting the regulatory relief provisions outlined in my testimony to provide regulatory relief to credit unions and community financial institutions is key. Credit unions need a healthy regulatory environment to succeed and serve the needs of their 108 million members.”


The National Association of Federally-Insured Credit Unions is the only national trade association focusing exclusively on federal issues affecting the nation’s federally-insured credit unions. NAFCU membership is direct and provides credit unions with the best in federal advocacy, education and compliance assistance. For more information on NAFCU, go to or @NAFCU on Twitter.


Molly Safreed, (NAFCU)

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