Removing Barriers Blog

House Appropriations Subcommittee Releases Legislation that Includes Significant Regulatory Relief for Credit Unions
Posted May 23, 2018 by Chandler Schuette

Yesterday the Congress passed historic regulatory relief for community financial institutions in S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act. Today, the House Financial Services and General Government Appropriations Subcommittee released draft legislation that it intends to consider and vote on tomorrow. The Financial Services and General Government (FSGG) Appropriations Act for Fiscal Year 2019 funds critical government programs and also includes numerous regulatory relief provisions for credit unions and banks. While this legislation will face difficulty in the Senate, this bill continues to build upon CUNA’s Campaign for Common-Sense Regulation.

In the funding portion of this draft bill, $191 million is directed to the Community Development Financial Institutions (CDFI) Fund. This is similar to the $190 million provided in last year’s subcommittee draft for fiscal year 2018. Working with our allies in Congress last year, that figure was increased to $250 million by the time the president signed the legislation into law. We will repeat that strategy and success again this year. Examples of CDFIs include community development banks, community development credit unions, community development loan and venture capital funds, and microenterprise loan funds. CDFIs are required to provide a 1:1 match for most of the awarded funds, which are offered on a competitive basis. CDFIs finance community development initiatives such as small businesses, community facilities, and low-income housing.

The Community Development Revolving Loan Fund (CDRLF) is funded at $2 million in this draft. In last year’s subcommittee draft for fiscal year 2018, this program received no funding. However, in the full committee markup last July, CUNA worked with Congresswoman Jaime Herrera Beutler (R-WA) and FSGG Chairman Tom Graves (R-GA) to include $2 million in the “Manager’s Amendment” to fully restore funding to the CDRLF. Because of CUNA’s work last year and our advocacy since then, the FSGG Subcommittee chose to fully fund this program in its initial FY 2019 draft released today. The CDRLF assists credit unions serving low-income communities.

For the Small Business Loan Administration, the draft provides the same maximum loan limit of $30 billion for the Section 7(a) loan program. It also directs the SBA to provide the same FY2018 Section 504 Loan Program maximum loan limit of $7.5 billion. Credit unions make both 7(a) and 504 loans.

Most importantly, this bill draft does not place the National Credit Union Administration (NCUA) under the Congressional appropriations process. Such a provision was included in last year’s Subcommittee draft and CUNA worked with Congressman Mark Amodei (R-NV) to offer a successful amendment to strip that provision when the full House of Representatives considered the bill.

This Fiscal Year 2019 Subcommittee draft provides many regulatory relief provisions that would benefit credit unions. It includes:

  • A two year delay to the effective date of the NCUA’s risk-based capital rule, from January 1, 2019 to January 1, 2021.
  • The Mortgage Choice Act, which specifies that neither escrow charges for insurance nor affiliated title charges shall be considered "points and fees" for purposes of determining whether a mortgage is a "high-cost mortgage." A high-cost mortgage designation restricts the terms of the loan and requires a lender to make certain unnecessary disclosures to the borrower. As H.R. 1153, this legislation passed the House earlier this year by a vote of 280 – 131. As part of H.R.10, the Financial CHOICE Act of 2017, this bill passed the House last year by a vote of 233 – 186.
  • The Privacy Notification Technical Clarification Act, which would exempt a financial institution, under specified circumstances, from the requirement to annually disclose its privacy policies to consumers. As H.R.2396, this bill passed the House late last year by a vote of 275 – 146.
  • The Financial Institutions Examination Fairness and Reform Act, which would enhance the rights of financial institutions and reduce unnecessary and burdensome features that accompany the federal financial examinations of banks and credit unions. As H.R.4545, this bill passed the House in March by a vote of 283 to 133. As part of H.R.10, the Financial CHOICE Act of 2017, this bill passed the House last year by a vote of 233 – 186.
  • The TRID Improvement Act, which would require the Consumer Financial Protection Bureau to allow the accurate disclosure of title insurance premiums and any potential available discounts to home-buyers. As H.R.3978, this bill passed the House in February by a vote of 271 – 145. As part of H.R.10, the Financial CHOICE Act of 2017, this bill passed the House last year by a vote of 233 – 186.
  • The Bureau of Consumer Financial Protection–Inspector General Reform Act, which would establish an independent Inspector General at the BCFP, nominated by the President and confirmed by the Senate. As part of H.R.10, the Financial CHOICE Act of 2017, this bill passed the House last year by a vote of 233 – 186.
  • A provision to place the BCFP under the appropriations process starting in fiscal year 2020. As part of H.R.10, the Financial CHOICE Act of 2017, this bill passed the House last year by a vote of 233 – 186.
  • A provision giving the president the authority to remove the Director of the Bureau of Consumer Financial Protection.
  • Provisions that enhance Congressional powers under the Congressional Review Act of 1996.