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NAFCU Urges Senate Action on Credit Union Regulatory Relief during the 113th Congress
(December 3, 2014) — In the letter, Hunt urges Senate leaders to act on S. 2699, along with S. 2698, that would provide important relief to credit unions with Interest on Lawyers Trust Accounts (IOLTAs); H.R. 3240, the “Regulation D Study Act,” that would mandate the Government Accountability Office to study the impact of the Federal Reserve Board’s monetary reserve requirements on depository institutions, consumers, and monetary policy; S. 635, the “Privacy Notice Modernization Act of 2013,” which would remove the requirement that financial institutions send redundant paper annual privacy notices if they do not share information and their policies have not changed, provided that they remain accessible elsewhere; and S. 1577, the “Mortgage Choice Act of 2013,” which would bring much needed relief to credit unions by altering the definition of points and fees under the Consumer Financial Protection Bureau’s “Qualified Mortgage” (QM) rule.
In addition to these important bills, Hunt also urges lawmakers to take swift action to address the spike in data security breaches at our nation’s retailers and says a Gramm-Leach-Bliley like federal standard must be put into place for retailers handling consumer’s financial information.
December 3, 2014
The Honorable Harry Reid The Honorable Mitch McConnell
Majority Leader Minority Leader
United States Senate United States Senate
522 Hart Senate Office Building 317 Russell Senate Office Building
Washington, D.C. 20510 Washington, D.C. 20510
Re: Senate Action Still Needed on Credit Union Regulatory Relief during the 113th Congress
Dear Leader Reid and Leader McConnell:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association exclusively representing our nation’s federal credit unions, I write today to continue to urge you and your colleagues to act before the end of the Congress on bipartisan regulatory relief measures that would help relieve regulatory burden at our nation’s credit unions. There are several bipartisan House-passed bills that would take small but meaningful steps toward the kind of regulatory relief credit unions need to continue to provide their 98 million members with basic financial services products and impeccable service.
IOLTA Parity for Credit Unions
NAFCU strongly supports legislation (S.2699, along with S. 2698) that would provide important relief to credit unions with Interest on Lawyers Trust Accounts (IOLTAs). Maintaining parity between the coverage provided by the National Credit Union Share Insurance Fund (NCUSIF) and the Federal Deposit Insurance Corporation (FDIC) on all types of deposits and accounts is imperative and a longstanding goal of NAFCU member credit unions. Consumers often do not distinguish between the government backing on accounts at financial institutions. It is important that the law dictate that there is no difference in coverage, so as not to favor one type of institution over another in the marketplace. NAFCU is pleased that the legislation will provide NCUSIF parity with the FDIC for certain accounts, including IOLTAs. NAFCU applauds Senators King, Warner, Tester and Fischer for their leadership on this issue. Similar legislation passed the House by voice vote earlier this year.
Federal Reserve Regulation D
Yesterday, the House considered and passed a bipartisan bill (H.R. 3240) that would mandate the Government Accountability Office to study the impact of the Federal Reserve Board’s monetary reserve requirements on depository institutions, consumers, and monetary policy. Regulation D limits a credit union member’s ability to transfer their money between savings and checking accounts to six transactions per month. Once a transaction is made beyond that limit, a member could be charged a fee or their savings account is re-classified as a “transaction account.” Under Regulation D’s current rules, savings accounts are not subject to reserve requirements, while transaction accounts are. This discrepancy tends to be confusing for credit union members and often forces credit union employees to focus their attention on the compliance issue rather than customer service. NAFCU believes a study of this outdated monetary reserve requirement would show strong evidence for the regulation’s full repeal and we hope that the Senate will clear this measure when it is received from the House.
Relief from Redundant Annual Privacy Notices
NAFCU strongly supports the bipartisan Privacy Notice Modernization Act of 2013 (S. 635), introduced by Senators Brown and Moran, which would remove the requirement that financial institutions send redundant paper annual privacy notices if they do not share information and their policies have not changed, provided that they remain accessible elsewhere. These duplicative notices are costly for the financial institution and often confusing for the consumer as well. This exemption will further clarify the CFPB’s recently rulemaking and allow credit unions to focus their resources on providing low cost financial services to their members without disturbing consumer privacy policy availability. Similar legislation has passed the House by voice vote and this legislation has over 70 cosponsors in the Senate. We strongly encourage the Senate to pass this small measure of relief this year.
QM Points and Fees Fix
NAFCU also urges your support for the Mortgage Choice Act of 2013 (S. 1577) introduced by Senators Machin, Johanns, Toomey, Kirk and Stabenow. This bipartisan legislation would bring much needed relief to credit unions by altering the definition of points and fees under the Consumer Financial Protection Bureau’s “Qualified Mortgage” (QM) rule. The Mortgage Choice Act of 2013 would make important changes that would exclude affiliated title charges from the “points and fees” definition, and clarify that escrow charges should be excluded from any calculation of “points and fees.” These changes would greatly improve the definition of “points and fees” used to determine whether a loan meets the QM test, and would ensure that those with low and moderate means would continue to be able to obtain their mortgages from their credit union at a reasonable price. Identical legislation passed the House earlier this year by voice vote.
In addition to consideration of the important bills outlined above, credit unions and their members remain hopeful that lawmakers will also take swift action to address the spike in data security breaches at our nation’s retailers. Given the breadth, scope, and ongoing nature of these breaches, a Gramm-Leach-Bliley like federal standard must be put into place for retailers handling consumer’s financial information. We hope that addressing these ongoing cyber and data security concerns will also be a focus during the remainder of this session.
Thank you for your consideration. If my colleagues or I can be of assistance to you, or if you have any questions regarding regulatory relief for our nation’s credit unions, please feel free to contact myself, or NAFCU’s Vice President of Legislative Affairs, Brad Thaler, at 703-842-2204.
Sincerely,
Carrie R. Hunt