Top credit union issues to watch in 2019

Throughout the past year, NAFCU’s award-winning advocacy team regularly met with top industry regulators and administration officials, while also attending events covering critical issues impacting credit unions. See what issues are on the industry’s Washington Watchdog’s agenda heading into the new year.

Current expected credit loss (CECL) standard

As credit unions wait for substantive guidance on the CECL standard, NAFCU has attended Financial Accounting Standards Board (FASB) and Transition Resource Group for Credit Losses meetings, including one in October to gain insights on issues that might arise when companies and organizations implement the standard. FASB recently finalized NAFCU-sought changes, including a delay in the standard’s effective date for the industry.

NAFCU has also attended previous transition resource group meetings on CECL, including one earlier this year, where the board first indicated it would issue guidance to clarify the standard’s implementation dates.

Recently, NAFCU President and CEO Dan Berger sent a letter to Treasury Secretary Steven Mnuchin outlining credit unions’ concerns regarding the standard.

Housing finance reform

This month, NAFCU testified for the 12th time during the 115th Congress, offering credit unions’ perspective on housing finance reform. NAFCU witness Rick Stafford stressed the importance of credit unions’ unfettered access to the secondary mortgage market and need for affordable housing options to members of the House Financial Services Committee. Last month, NAFCU also met with Department of Housing and Urban Development (HUD) Secretary Ben Carson to discuss credit unions’ priorities in the housing finance market.

HMDA

We recently updated our S. 2155 summary chart, which includes a note about the CFPB’s final rule to implement and clarify a provision that exempts certain credit unions from collecting and reporting on certain data points added to the Home Mortgage Disclosure Act (HMDA) by the Dodd-Frank Act. The bureau has also released its filing instructions for HMDA data collected in 2019.

NAFCU has a host of HMDA compliance resources available to association members, including charts and guides, articles, webcasts and blog posts. The bureau indicated it will likely review the 2015 HMDA rule in 2019; NAFCU will keep credit unions updated on any proposed changes.

Fintech

Last month, NAFCU Senior Counsel for Research and Policy Andrew Morris attended various sessions at DC Fintech Week, during which Office of the Comptroller of the Currency’s Joseph Otting said the agency would likely reveal special-purpose national bank charter applications from fintech companies by the end of the year or early 2019. This is a move supported by NAFCU, which has advocated for a smart regulatory framework for fintech companies.

NAFCU acknowledges that fintech can produce real benefits to consumers, including increased speed, convenience and new product offerings that make it easier for them to manage their financial lives. However, the association has urged lawmakers and regulators to ensure that when fintech companies compete with regulated financial institutions, they do so on a level playing field. In a letter cited by the Senate Banking Committee, NAFCU expressed concern that certain fintech companies may be able to exploit supervisory gaps to obtain a competitive advantage in the marketplace. Although non-bank lenders are subject to the enforcement and rulemaking authority of the Bureau of Consumer Financial Protection, they are not supervised in the same way as credit unions or banks, which could create cybersecurity risks in a data-rich banking environment.

NAFCU has also advocated for agencies interested in fintech to focus on ways to encourage innovation within the credit union industry. In response to proposals issued by the bureau’s Office of Innovation, NAFCU has urged development of more streamlined policies related to no-action letters and waiver programs, which could help credit unions test new products, disclosures or services. In addition, NAFCU recently expressed its support for the Federal Reserve’s proposal to develop a new, real time settlement service and potential directory to link credit unions and other institutions to a future, faster payments system.

Data Security

NAFCU continues to share with Congress credit unions’ principles for data security. The association recently sent a letter to House leaders on the issue following the release of a House Oversight and Government Reform Committee report on the Equifax data breach, which determined that the incident could have been prevented.

NAFCU has long been active with lawmakers on this issue, and was the first group after the massive 2013 Target data breach to call for a legislative solution to reform the nation’s data security system. The association is currently engaged as Congress considers a bill that would require data breach notifications for financial entities akin to what is in place for financial institutions under the Gramm-Leach-Bliley Act.

Faster payments

NAFCU has been active in collaborating with the Federal Reserve on faster payments. NAFCU Senior Counsel for Research and Policy Andrew Morris attended DC Fintech Week where Treasury Department Counselor Craig Phillips indicated that the department is coordinating with other regulators to develop cryptocurrency policy and reiterated the importance of the U.S. modernizing its payment systems. Phillips referenced the Federal Reserve’s proposal to develop a 24/7/365 RTGS (real-time gross settlement) service to facilitate interbank settlement of faster payments (read more about the proposal here). A Fed rep also gave an update on the initiative to the NAFCU Cybersecurity and Payments Committee.

The U.S. Faster Payments Council (FPC) also launched recently, which NAFCU previously offered recommendations to strengthen. NAFCU is in close communication with the Federal Reserve as it works to make the payments system faster and more secure.

Americans with Disabilities Act (ADA)

NAFCU continues to stand by credit unions facing meritless lawsuits due to unclear guidance for website accessibility under the Americans with Disabilities Act (ADA). NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt and I attended oral arguments for the industry’s first case at the appellate level: a hearing held by the U.S. Court of Appeals for the Fourth Circuit in the case against the Department of Labor Federal Credit Union (DOLFCU). NAFCU has also filed an amicus brief in support of DOLFCU, and also stood by the credit union during its first hearing earlier this year.

Telephone Consumer Protection Act (TCPA)

Following a meeting in October with the Federal Communications Commission’s (FCC) Consumer and Government Affairs Bureau, NAFCU Senior Regulatory Affairs Counsel Ann Kossachev reiterated to the FCC NAFCU’s request for more flexibility under the TCPA to ensure credit unions can contact their members with important information without fear of violating the law.

Small business loans

NAFCU Regulatory Affairs Counsel Kaley Schafer is actively working on the association’s goal of improving access to credit union small-dollar loans to small businesses across the nation through various meetings with the Small Business Administration (SBA). Recently, Schafer attended a small business roundtable to discuss the SBA’s proposed changes to 7(a) Express loans. Schafer also recently met with the SBA’s Office of Capital Access to discuss credit unions’ participation in SBA programs.

As these topics will remain relevant in 2019, NAFCU will continue to monitor and advocate for regulatory relief for the credit union industry.