Nussle opening statement at HFSC Financial CHOICE Act Hearing

WASHINGTON, DC (July 12, 2016) — Credit Union National Association (CUNA) President and CEO Jim Nussle testified before the House Financial Services Committee at a hearing entitled, “Making a Financial Choice: More Capital or More Government Control?” The hearing focused on Title I of Chairman Jeb Hensarling’s Financial CHOICE Act, which would exempt credit unions and banks operating with a leverage ratio of greater than 10% from certain capital and liquidity requirements. Nussle delivered the following opening statement at today’s hearing:

“Chairman Hensarling, Ranking Member Waters, Members of the Committee:

Thank you very much for the opportunity to testify at today’s hearing and share the Credit Union National Association’s views on Title I of the Chairman’s Financial CHOICE Act.

I’ve been at CUNA for nearly two years, and a constant refrain I hear from our members is that they’re being crushed by regulations implemented mostly in response to a crisis they neither caused, nor contributed to.

The time and financial costs of regulatory burden impedes the ability of credit unions to serve their members, and is really the leading driver of credit union consolidation, which has accelerated since 2010 and is now at a record pace.

We estimate that regulatory burden cost America’s credit unions and their members $7.2 billion in 2014 alone, up from just $4.4 billion in 2010.

This is money that’s not being put to use to benefit credit union members, but they are definitely paying for it.

If regulatory burden costs were reduced, credit unions could invest more in their members through better rates on savings and loans, stronger capital positions, and the development of alternative delivery channels.  This would allow credit unions to make an even more powerful impact in the lives of their members.

Credit union executives and Board members have a hard time understanding why they must comply with the rules designed primarily for the largest financial institutions and the abusers of consumers, and an even harder time understanding why their elected representatives in Congress really can’t do anything about it.

So, we are here to engage in the process, not because this bill will solve all of the regulatory burdens facing credit unions but because we think it is a good place to start the discussion on removing barriers so credit unions can more fully serve their members.  We hope the Committee will engage in the process on a bipartisan basis.

As you know, credit unions are subject to statutory capital requirements, under the Federal Credit Union Act.  In order to be considered well-capitalized for the purposes of prompt corrective action, a credit union must maintain a net worth ratio of at least 7 percent.  That’s one percentage point higher, by the way, than the current requirement for banks.

Unlike banks, credit unions are not for profit, and the only source of capital for credit unions is their retained earnings.  With limited ability to raise capital and given the relatively conservative market strategy which is really inherent in credit unions’ cooperative structure, many credit unions are currently operating with a leverage ratio in excess of 10 percent.

Title I would create a path for credit unions and other banking organizations with greater than a 10% leverage ratio to operate with reduced regulatory burdens.

To give you a sense of how this legislation would impact credit unions, today nearly 4,000 of the over 6,000 insured credit unions have leverage ratios greater than 10 percent.  This represents approximately 65 percent of all credit unions, holding 62 percent of credit union assets; and serving nearly 60 percent of the over 100 million credit union members.

We believe many of these credit unions would take advantage of the regulatory relief provided under Section 102, which would include relief from, among other things, NCUA’s regulations on interest rate risk, liquidity requirements, and the recently finalized risk-based capital requirements.

We appreciate that this legislation structures the higher capital threshold as an option, rather than a requirement.  We would ask you to resist efforts to require credit unions to hold additional capital because this could reduce their ability to lend to credit union members; further, such a requirement would be inappropriate and unnecessary for credit unions because they don’t have a history of capital inadequacy.

Nevertheless, providing relief to credit unions that have demonstrated a history of operating at higher capital levels, and developing a process for remediation in the event that capital levels fall below 10 percent, strikes an appropriate balance.  This would ensure the continued safety and soundness of credit unions while simultaneously removing barriers that keep credit unions from doing even more for their members.

We appreciate that the Committee is considering legislation to provide meaningful regulatory relief for so many credit unions.  We look forward to reviewing the rest of the legislation and working with the Chair and Ranking member together with the Committee to remove unnecessary barriers, so credit unions can more fully serve their members.”

About CUNA

Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit To find your nearest credit union, visit


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