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Live from the GAC: Updates from Our Regulators

Authored By: JT Blau on 3/1/2023

This week thousands of credit union staff, board members, leagues, vendors and more converged on Washington, DC for the annual CUNA Governmental Affairs Conference. It's a great opportunity to engage with our regulators and lawmakers and get a sense of what issues are of high priority for them. On the main stage on Monday, CFPB Director Rohit Chopra had a dialogue with CUNA's CEO Jim Nussle, followed by remarks from NCUA Chairman Todd Harper.

Director Chopra opened the discussion with some news - earlier on Monday, the Supreme Court announced they will hear arguments on the appeal of the recent 5th circuit ruling that the CFPB's funding mechanism is unconstitutional. Director Chopra noted this was a positive development because it will bring clarity and certainty to what is currently an unclear matter. The Supreme Court taking the case comes on the heels of Congressman Andy Barr calling for the passage of the TABS Act, which would put the CFPB's funding under the appropriations process, and thus subject to more direct Congressional oversight.

When pressed on one-size-fits-all regulation, and whether credit unions should have a different regulatory structure than banks because of our not-for-profit, member-owned structure, Director Chopra reiterated a position he shared with us in a meeting last fall at NextMark Credit Union with credit union leaders in Virginia: While he's not opposed to a two-tier regulatory structure, he believes the tiers should be relationship banking and non-relationship banking, rather than a structure-based divide like banks and credit unions. However, the CFPB has not defined what makes an entity a relationship banking institution vs. a non-relationship banking institution. They are looking for stakeholders to help them set those parameters.

Director Chopra also addressed credit card late fees, another hot topic in recent weeks with the CFPB's rulemaking to cut credit card late payment fees to $8 or 25% of the minimum payment amount. He acknowledged that it is the largest credit card issuers, not credit unions, that are generating huge profits from credit card late fees. However, credit unions are once again swept into one-size-fits-all regulation targeted at large banks, the biggest of which each hold more total assets than all U.S. credit unions combined.

NCUA Chairman Todd Harper took the stage next, and discussed a number of topics of high importance to credit unions, including liquidity, interest rate risk, and cybersecurity. One topic he spent a lot of time on, however, was third-party vendor examination authority. Last year, a bill was introduced that would give the NCUA the same examination authority over CUSOs and third-party vendors that they have over credit unions. This is a top priority for Chairman Harper, and he used his time on stage yesterday to refute several of the common criticisms of this effort.

Your League opposed this legislation when introduced last year, in large part due to the uncertainty of its impact on credit unions. Not only will credit unions bear the costs of additional NCUA examiners, third party vendors who incur additional costs and burdens are likely to pass these costs onto credit unions, or at worst stop doing business with credit unions all together. The effects of this legislation are still unknown, and while the opposition of the League and other stakeholders kept last year's bill from advancing, a new Congress means this issue can rear its head again at any time.

As GAC marches on, the League remains highly engaged with regulators and lawmakers, telling your success stories and highlighting the credit union difference. We hosted a legislative reception at the Credit Union House of DC on Monday night, where dozens of Virginia credit union staff leaders met with Senator Mark Warner. We've also met with NCUA Board Member Rodney Hood, and are meeting this week with NCUA Vice Chairman Kyle Hauptman, U.S. Sen. Tim Kaine, and all our members from the House of Representatives.

You can read Chairman Harper’s full remarks here.

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