Removing Barriers Blog

Temporary Government Funding Bill Passes, Delaying Regulatory Relief Fight
Posted September 29, 2016 by CUNA Advocacy

On Wednesday evening, the Congress passed a “Continuing Resolution,” to fund government operations through December 9th.  This resolution was necessary, because the parties negotiating a final deal to fund government operations for all of fiscal year 2017 anticipated that they would be unable to reach a comprehensive agreement by September 30th, the end of fiscal year 2016.

While this temporary measure averts a federal government shutdown, it does not include any of the regulatory relief provisions that we lobbied for and achieved in the House-passed Financial Services and General Government Appropriations (FSGG) Act for FY 2017.  Nevertheless, we will continue to lobby Congress to include these same regulatory relief provisions in the final “Omnibus” or similar legislation, that will passed by Congress after the November elections, which will fund the remainder of fiscal year 2017.

The original House bill includes significant relief for banks and credit unions, including:

  • 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 contained 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 contained 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 maintained 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.

The Senate Appropriations Committee approved its version of the FY 2017 Financial Services and General Government (FSGG) appropriations bill.  The Committee report included 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); 
  • 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."; and
  • Prohibiting funds from being used to penalize financial institutions that provide financial services to certain persons in States and jurisdictions where marijuana is legal.

The House Appropriations Committee-passed Labor, Health and Human Services, Education, and Related Agencies Appropriations Act for fiscal year 2017 includes provisions delaying the Department Of Labor’s (DOL) overtime rule, as well as its “fiduciary” rule.  Both rules could have adverse and unintended negative consequences for those it aims to help, as well as credit union members.

CUNA continues to monitor this situation and lobby Congressional appropriators to achieve the maximum amount of regulatory relief possible through the appropriations process.