Removing Barriers Blog

House Financial Services to Hold Another Removing Barriers Hearing
Posted October 18, 2015 by CUNA Advocacy

On Wednesday, the House Financial Services Committee Subcommittee on Financial Institutions and Consumer Credit will hold a legislative hearing on several bills aimed at removing barriers for credit unions and small banks to serve their members and customers.  This is at least the tenth hearing the committee has held on these types of bills since the beginning of the year; and, so far this year, 17 CUNA supported bills have been approved by the committee.  There more will be subject to a hearing, ripening them for future committee consideration:  H.R. 2473, the Preserving Capital Access and Mortgage Liquidity Act; H.R. 2287, the National Credit Union Administration Budget Transparency Act; H.R. 2896, the Taking Account of Institutions with Low Operational Risk (TAILOR) Act.

  • H.R. 2473 would provide credit unions under $1 billion in assets parity with similarly sized banks with respect to membership eligibility requirements for the Federal Home Loan Banks (FHLB) System.  Under the Federal Home Loan Bank Act, credit unions do not qualify under the definition of “community financial institutions,” and as a result they are not exempt from an eligibility requirement requiring FHLB bank members to hold 10% of their assets in mortgages at the time of joining the bank.  This exemption has taken on enhanced importance given the Federal Housing Finance Administration’s proposal require bank members to meet eligibility requirement throughout their membership in the bank, not just when they join.  The bill is sponsored by Representatives Randy Neugebauer (R-TX) and Lacy Clay (D-MO), the chairman and ranking member of the subcommittee.

  • H.R. 2287, the National Credit Union Administration Budget Transparency Act, introduced by Representatives Mick Mulvaney (R-SC) and Kyrsten Sinema (D-AZ), would bring transparency and accountability to the National Credit Union Administration (NCUA) budgeting process by requiring the agency to hold a public hearing and allow for an open comment period where stakeholders can submit comments.  The agency held this type of hearing from 2001-2008, but the hearings were discontinued.  Some of criticized the hearings as ineffective or theatre, but we believe they were and would be critically important because they provide stakeholders with the opportunity engage NCUA board members on the record regarding the agency’s budget – a budget that is funded through credit union resources.

  • H.R. 2896, Taking Account of Institutions with Low Operation Risk (TAILOR) Act of 2015, introduced by Representative Scott Tipton (R-CO), would require financial regulators to take into account the risk profile of the institutions that they regulate when promulgating regulations. CUNA believes credit unions are precisely the type of institutions for which this legislation is designed to help because they are well-capitalized, with a low risk profile and a long history of meeting their members’ credit needs– in good times and bad.

These bills, combined with the other 17 bills the committee has approved this year, cut to the heart of the problem that credit unions face in the aftermath of the financial crisis with respect to regulatory burden.  Policymakers from across the political spectrum acknowledge that credit unions and small banks were not responsible for the financial crisis, but the public policy response to the crisis without question fails to recognize this seemingly indisputable fact.  Credit unions have been subjected to tens of thousands of pages of new regulations in the last seven years; just last Thursday, the NCUA and the CFPB finalized more than 1,000 pages of new regulations for credit unions.  This hearing is part of the long process of bringing that to a stop.