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For many, the end of the year presents a time for reflection and an opportunity to look back over the progress made throughout the preceding twelve months. I’m not sure any of us can remember a year quite like 2016 and I’m confident that we will not soon forget where we were when voters elected Donald Trump, President of the United States, and the Chicago Cubs won the World Series.
From a credit union advocacy perspective, 2016 was also remarkable. Major victories at NCUA on more than a handful of issues help ensure that credit unions will continue to be able to meet the needs of their members and that consumers across the country will continue to have strong, safe and sound cooperative credit options. Thanks to help from Congress, we made progress toward getting CFPB to acknowledge and use its statutory exemption authority to mitigate the harmful impact of rules, designed for big banks and abusers of consumers, on credit unions and their members. Leagues in several states successfully enacted credit union act updates and other legislation designed to ensure credit unions can continue to efficiently and effectively serve their members. Working with our league partners, we continued to hold merchants accountable for data breaches, pursuing legislation in Congress and state legislatures, and litigation in courts. And, we protected the credit union tax status from scrutiny in Congress and attacks in the states.
That’s a lot of progress in one paragraph. Let’s unpack it a bit:
Thanks in large part to the more than 11,000 comment letters filed by CUNA, Leagues, credit unions, volunteers and employees, NCUA finalized a field of membership rule that modernizes common bond regulation for federal credit unions. This helps keep the federal charter competitive with state charters, but more importantly, it will make it easier for consumers and small businesses in many areas to access credit union services.
NCUA also has made it easier for credit unions to serve their small business members, by removing from regulation requirements that are not required by the Federal Credit Union Act. This puts more decision making in the hands of credit union executives and boards of directors, and eliminates the need for waivers for activity that has been permissible for quite some time.
Working together, credit unions, leagues and CUNA were able to work with NCUA on examination fairness issues. NCUA took strides to reduce the frequency of exams for healthy credit unions and committed to comprehensive modernization of the supervisory process. These were major steps forward considering that not less than 18 months ago the agency was largely unwilling to consider such moves.
For the first time, NCUA published the methodology for the overhead transfer rate, giving stakeholders more information about how the agency uses credit union resources for noninsurance functions.
For the first time in a long time, NCUA held a public forum for stakeholders to submit comment on the agency’s budget. We may disagree with the agency on the budget priorities and trends, but NCUA deserves a lot of credit for holding the Board level briefing and inviting testimony from the public.
In Congress, CUNA, Leagues and credit unions united 400 Members of Congress in letters to the CFPB urging it to use its statutory exemption authority to keep its rulemaking, designed for big banks and abusers of consumers, from impacting credit unions and their members. And, for the first time, the Bureau used this authority—albeit limitedly—in the proposed rule on payday lending.
Our deliberate strategy of aggressively pursuing this issue with the Congress and the Bureau has positioned us very well for the future, and it has forced the CFPB to consider the impact of rules on credit union members before moving forward with sweeping rules for debt collection and overdraft protection.
We strongly urged NCUA and the Small Business Administration Office of Advocacy to intervene on behalf of credit unions with the CFPB’s payday and small dollar lending proposal. Both sent strong comment letters, with NCUA urging CFPB to exempt the PAL program and make other reforms to the proposal. This was one of the first times the NCUA has publicly critiqued the CFPB on behalf of credit unions and members. This was also the first time SBA Office of Advocacy pushed back against a CFPB rule, questioning whether it limited access to credit for consumers. It also urged the CFPB to exempt credit unions.
State Credit Union Act modernization legislation was enacted in Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Louisiana, Michigan, Missouri, Virginia and Wisconsin.
Leagues in several states helped enact transportation network company legislation with credit union protections. These states include: Iowa, Massachusetts, Mississippi, Missouri, Rhode Island, South Dakota, West Virginia and Utah.
The Department of Labor’s final rule defining “fiduciary” included several CUNA-suggested changes clarifying a more limited scope of impact on credit unions. Legislative efforts supported by CUNA in the 114th Congress aimed at further improving the "fiduciary" rule, as well as the DOL overtime rule, have provided the basis for additional relief in the new administration and Congress.
At our urging, Congress began the process of modernizing the Telephone Consumer Protection Act by holding hearings in the House Energy and Commerce Committee and Senate Commerce Committee.
The Federal Housing Finance Agency (FHFA) removed a CUNA-opposed provision requiring credit unions to maintain membership eligibility throughout the course of Federal Home Loan Bank membership.
We also convinced FHFA to not include “Language Preference” language on the Uniform Residential Loan Application, which would have been problematic for credit unions.
Implementing CUNA/League-supported legislation, the CFPB adopted the credit union-supported threshold for activity in a rural area necessary to qualify for the small creditor exemption.
CUNA, Leagues and credit unions helped to convince a reluctant CFPB to commence a rulemaking to fix TRID/TILA/RESPA issues.
CUNA prevailed in an interchange surcharging case in U.S. District Court in Texas. A similar case out of New York will be heard by the United States Supreme Court next year; CUNA and the New York League are prepared to participate in that case.
Our litigation against Home Depot and other merchants, who have allowed consumers’ data to be breached continues. Earlier this year, we won a favorable ruling affirming our standing in the Home Depot lawsuit.
Draft tax reform legislation that might have inadvertently resulted in credit unions being subject to the federal income tax, but working together with the California League, we were able to secure language from the sponsor that explicitly exempt credit unions from this new tax.
Earlier this year, House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady released a blueprint for comprehensive tax reform. The report is broad but does not attack the credit union federal income tax status, in large part due to the work CUNA, leagues and credit unions have been doing since 2013’s Don’t Tax My Credit Union campaign.
The Vermont League defeated an attempt by the Vermont Bankers Association to amend a budget bill to add credit union taxation.
There’s a lot on this list of accomplishments, and I’m sure there’s a lot that is still missing. Nevertheless, these CUNA/League/credit union advocacy accomplishments reflect the powerful impact and positive result we can have when the credit union system works together.
We’re going to need to continue to work together like this because 2017 promises its own set of challenges:
The CFPB is not working for credit unions and credit union members. A new administration and a new Congress present the opportunity to continue the work on regulatory relief and CFPB reform. We have a plan—a campaign!—to address this and we will need everyone’s help to get it done.
NCUA is defending its member business lending and field of membership rules in court against baseless attack from the banking trade groups; we’re standing with them because they have acted within the scope of the Federal Credit Union Act, and these rules will benefit credit union members across the country.
As long as merchants fail to protect their data systems from hackers, breaches will continue and consumers and credit unions will be harmed. Our resolve to improve the law so that those who accept cards for payment are held to security standards like those who issue cards is strong; and, our commitment to pursue claims against merchants that allow breaches to happen is unshakable.
The political environment is ripe for comprehensive tax reform, and it’s high on everyone’s agenda. Credit unions need to be prepared to engage in this process (and we are), emphasizing that credit unions are tax exempt because of their structure as not-for-profit financial cooperatives and their mission to promote thrift and provide access to credit for provident purposes.
Thank you for all you have done this year to make our progress possible. We are well positioned for continued success in 2017!
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