Removing Barriers Blog

Regulatory Relief Moving through the Appropriations Process
Posted July 14, 2016 by CUNA Advocacy

Credit unions have the opportunity to achieve significant regulatory relief through the Congressional Appropriations Process.  So far this year, the full House of Representatives has passed a financial services appropriations bill for FY 2017, which includes significant relief for credit unions.

The Senate Appropriations Committee has passed its own version of the bill which also includes some provisions for financial institutions.  It is likely that an omnibus spending bill including some or all of these bills will be agreed to before the end of 2016.  However as usual, it is too soon to tell which regulatory relief provisions will be included in the final omnibus package.

On July 7th, the full House of Representatives passed the FY2017 Financial Services and General Government (FSGG) Appropriations Act (H.R. 5485).  This bill included several CUNA-supported provisions addressing regulatory burden for credit unions.

Credit union friendly items in the bill include:

  • Changing the leadership structure of the CFPB to a five-person board and placing the bureau under the appropriations process;

  • Requiring the CFPB to study the use of arbitration prior to issuing any new regulations. This would affect the bureau’s recent proposal on arbitration; 

  • Allowing for residential mortgages held in portfolio by lenders to be recognized as qualified mortgages for the purposes of the CFPB's mortgage lending rules. These efforts would especially help community bankers and credit unions who have decreased their mortgage lending business in recent years due to onerous regulatory requirements;
  • Supporting efforts to clarify the definition of ‘‘points and fees’’ for qualified mortgages in order to improve access to credit for low and moderate income borrowers; and

  • Stopping the CFPB from proceeding with its short-term, small-dollar loan proposal. 

The committee report also contains a number of other items of interest to credit unions, including:

  • CUNA-supported language that would call for the Federal Communications Commission to revisit its Telephone Consumer Protection Act (TCPA) order, and address technical questions that may be impossible for financial institutions to resolve.  This includes clearing up whether an exemption for financial institutions to contact consumers with additional information can actually be used, and urging the FCC to provide more flexibility to the requirements. 
  • Directing the CFPB to report to the Senate and House Appropriations Committees, Senate Banking Committee and House Financial Services Committee on how it has used its section 1022 exemption authority to tailor its rulemakings to community financial institutions within 120 days of the bill’s enactment;
  • Directing the Government Accountability Office (GAO) to determine the impacts of the Foreign Account Tax Compliance Act on U.S. citizens living abroad. The GAO must also make recommendations on FATCA implementations, and both must be done within 180 days of enactment of the bill;
  • Directing the Office of Critical Infrastructure Protection and Compliance Policy to report to several Congressional committees on ways to improve cybersecurity and an update on collaboration across the financial services sector within 60 days of the bill’s enactment. 
  • Directing the CFPB to consider its recent actions related to auto lending that are reducing competition, regulating auto dealers, and raising costs to consumers.

  • The bill also contains funding of key programs that assist low-income credit unions that serve underserved areas and members of modest means, including:
    • Maintaining the annual $2 million for the NCUA’s Community Development Revolving Loan Fund, which provides grants and loans to low-income designated credit unions; and
    • Increasing the funding to $250 million for the U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund, which awards funds to certified CDFIs, including the 276 credit unions certified as of April 30.

The bill also maintains funding for the two Small Business Administration (SBA) programs that are crucial to credit unions:

  • $28.5 billion for the SBA’s 7(a) program, which allows the government to guarantee up to 85% of loans, with the guaranteed portion not counting against credit unions’ cap on member business lending; and

  • $7.5 billion for the SBA’s 504 loan program, which is used for long-term, fixed-rate financing on major fixed assets, such as equipment and real estate.

On June 15th, the Senate Appropriations Committee approved its separate versions the FY 2017 Financial Services and General Government (FSGG) appropriations bill.  The Committee report includes language urging Treasury to work with financial regulators to address student debt. Additionally, the bill itself contained:

  • Funding for the Community Development Financial Institutions (CDFI) fund at $234 million, $500,000 more than FY16, and $16 million less than the bill passed last week by the House Appropriations committee;
  • Maintaining $2 million for  NCUA's Community Development Revolving Loan Fund (CDRLF); and
  • Funding a new account called the Cybersecurity Enhancement Account. The Committee recommends $47,743,000 for the initiative.  It is "designed to bolster the (Treasury) Department's cybersecurity posture and mitigate threats to the U.S. financial infrastructure."  It will also "improve identification of cyber threat and better protect information systems from attack; provide a platform to enhance efficient communication, collaboration, and transparency around the common goal of improving not only the Cybersecurity of the Treasury Department,  but also the Nation’s financial sector."

In the committee markup, an amendment from Sen. Jeff Merkley (D. Ore.) was passed that prohibits funds from being used to penalize financial institutions that provide financial services to certain persons in States and jurisdictions where marijuana is legal.