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This week, House Financial Services Committee Chairman Jeb Hensarling (R-Tex.) released further details on his reform package, the Financial CHOICE Act, which outlines a series of changes to the Dodd-Frank Act. We support many of the reform elements of the Hensarling proposal.
One of the major pieces of the reform package is a repeal of the Durbin Amendment, which requires the Federal Reserve to limit interchange fees charged to retailers on debit card transactions. While the intent of this amendment was to pass fee savings back to consumers, retailers wound up keeping most of the revenue (an estimated $36 billion).
The Hensarling proposal also contains several reforms to the CFPB, such as turning it into a 5-member commission and moving it under the appropriations process.
It also contains the TAILOR Act, which instructs financial regulators to account for entity size and risk when issuing rules, and language to increase the NCUA Board from three to five members.
Furthermore, the package includes text requiring the CFPB and other regulators to gain the approval of Congress before issuing regulations likely to have an economic impact of $100 million or more.
Several other credit union-favorable pieces of legislation are part of the Hensarling bill, including the:
SeniorSafe Act, which would protect financial institutions from liability when reporting suspected financial elder abuse;
Limitations to Operation Choke Point, which would prevent the federal government from limiting or terminating financial institutions’ relationships with certain customers unless certain criteria are met; and
Financial Institution Examination Fairness and Reform Act, which would reform federal examinations of financial institutions to create an independent ombudsman and an independent examination appeals process.
Some of the CUNA-supported provisions relating to housing issues include the:
Mortgage Choice Act, which would adjust the definition of “points and fees” to ensure greater consumer choice in mortgage and settlement services under the Ability to Repay/Qualified Mortgage (QM) rule;
Portfolio Lending and Mortgage Access Act, which would treat mortgages held in portfolio at credit unions and other mortgage lenders as qualified mortgages;
Community Financial Institution Mortgage Relief Act, which exempts mortgages made by institutions under $10 billion in assets and held in portfolio for three years from RESPA’s escrow requirements and exempts mortgage servicers that service fewer than 20,000 mortgages annually from the requirements of Section 6 of RESPA;
The Home Mortgage Disclosure Adjustment Act, which increases the thresholds for small depository institutions from HMDA reporting requirements.
Finally, the Hensarling package contains reforms specific to credit unions, including extending the examination cycle to 18 months for well-capitalized, well-managed credit unions. The proposal also gives consideration to many concerns credit unions have regarding examination fairness and frequency, the NCUA budget, and the costs and benefits of NCUA rulemakings.
The Financial CHOICE Act is still in the drafting process, so we will continue to monitor any additions or modifications to the package to ensure that the legislation contains meaningful regulatory relief for credit unions. While the Hensarling bill is not expected to be adopted this year, the reforms proposed are likely to come up again next year when the 115th Congress is sworn in.
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