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Late last night, the credit union movement scored critical wins in the House Appropriations Committee’s markup of the Financial Services and General Government (FSGG) Appropriations Act for Fiscal Year 2018. The bill includes a number of provisions that were included in H.R. 10, the Financial CHOICE Act. It includes significant regulatory relief and brings the CFPB under the appropriations process, reforms its UDAAP authority, and makes some of the other changes found in CHOICE that add more checks and balances to the CFPB rulemaking process. Other relief provisions include the repeal of the CFPB Small Business Loan Data Collection program. It also repeals the CFPB’s authority to write rules for arbitration. In addition, the draft provides for community financial institution mortgage relief as well as “safe harbor” for certain loans held on portfolio.
Issues of ConcernHowever, the draft bill includes several provisions of serious concern to credit unions. First and foremost, it puts federal banking regulators, including the NCUA, under the appropriations process. CUNA opposes bringing the NCUA under the appropriations process. The money that funds the NCUA comes solely from credit unions and their members, not the taxpayers in general. Maintaining a separate, independent federal regulator and insurer is critically important to the credit union system, and the structural and mission-driven differences between credit unions and banks necessitate such a regulatory scheme. Subjecting NCUA to the appropriations process will adversely impact the independence of NCUA. Also, credit unions and their members remain willing to pay for their own regulator provided there is sufficient transparency with respect to the agency’s budget and the overhead transfer rate. Finally, credit unions fear that in the future, credit union funds could be a piggy bank for the federal government’s general fund, resulting in more credit union dollars going to the government than they receive back in the form of examination and supervision services.
During the markup, Congressman Mark Amodei (R-NV) introduced an amendment that would strike this provision in the bill. He then withdrew his amendment after he announced that he and FSGG Chairman Tom Graves (R-GA), as well as House Financial Services Committee Chairman Jeb Hensarling (R-TX), had been in talks about how NCUA and the NCUSIF were different than banks and their Deposit Insurance Fund. Further, he announced that he had the commitment of the two Chairmen to “work hard” with him in the coming weeks to craft a compromise that would give Congress more oversight over the NCUA, while at the same time allowing the agency and the insurance fund to maintain its independence. We will also be working with Senators as the Senate Financial Services and General Government (FSGG) Appropriations Subcommittee is expected to markup its version of the bill in early September. Next Steps: CUNA and the Leagues will work with Chairman Graves, Representative Amodei and Chairman Hensarling as the bill moves the to the floor. These members deserve effusive praise for their hard work. We will also be working with Senators as the Senate Financial Services and General Government (FSGG) Appropriations Subcommittee is expected to markup its version of the bill in early September.
CUNA’s second concern with the bill is that the Community Development Revolving Loan Fund, funded at $2 million last year, had been defunded in this bill. CDRLF assists credit unions serving low-income communities. However, Congresswoman Jaime Herrera Beutler (R-WA) worked with Chairman Graves to include $2 million in the “Manager’s Amendment” to fully restore funding to the CDRLF. This is also a major victory and the Congresswoman and Chairman Graves, as well as their staff, should be thanked for their hard work and attention to credit union needs. Next Steps: CUNA and the Leagues will work with the Senate subcommittee to ensure this funding is included in their bill.
CUNA is also disappointed that the bill includes a $58 million cut to the Community Development Financial Institutions Fund. Even with this large cut, funding for the CDFI Fund is at historically high levels. Congressman Jose Serrano (D-NY) offered an amendment to restore full funding. However, the bill failed on a voice vote because he failed to provide the requisite offset in spending needed. However, we appreciate his efforts.
Congressman Mark Amodei (R-NV) also offered an amendment to replace the CFPB director with a commission. While he eventually withdrew his amendment, he received a commitment from Chairman Graves to work with him and have further discussions on this issue. The bill already includes a provision that would place the CFPB under the Congressional appropriations process. CUNA supports both of these initiatives.
Next Steps: CUNA and the Leagues will work with the Senate subcommittee – and importantly, will work with other groups for which this issue is a priority.
Credit Union Priorities & PassageThe bill's report language also included CUNA priorities. For example, the report states, "The Committee remains concerned with Federal regulation of community banks and credit unions. The Committee requests each financial regulator to consider the risk profile and business model of a financial institution when the regulator engages in a regulatory action. In doing so, the regulator must determine the necessity, appropriateness, and impact of applying its regulatory action to an institution or class of institutions, and importantly, is directed to tailor its regulatory action in a manner that limits the regulatory compliance impact, cost, liability risk or other burdens as is appropriate for the risk profile and business model involved."
The report also urges "continued coordination to develop consistent and workable cybersecurity safeguards across the financial services sector." Finally, the report includes direction to the federal government to encourage financial literacy efforts. The final bill passed on a partisan vote of 31 to 21. The appropriations process is a confusing and fluid process that includes the Senate and a possible conference committee. America’s credit unions are well positioned to achieve some victories at the end of the process.
CUNA and the Leagues will again work hand in hand as the process moves to the Senate and activate grassroots efforts when necessary.
For a summary of the bill, please visit:
For the text of the bill, please visit:
For the bill report, please visit:
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