WASHINGTON (10/22/15)--Legislators and witnesses at a Wednesday’s U.S House subcommittee hearing provided reasons why three CUNA-supported bills under discussion would better serve consumers and the credit union system.
During the proceedings of the House Financial Services subcommittee on financial institutions and consumer credit, most legislators and witnesses agreed that one-size-fits-all regulatory policies hurt small financial institutions such as credit unions.
Rep. Scott Tipton (R-Colo.), sponsor of the Taking Account of Institutions with Low Operation Risk Act (TAILOR) of 2015 (H.R. 2896), said his bill would combat that one-size-fits-all approach. The bill would force federal regulators to shape regulations that fit the risk profile and business model of institutions.
“Banks and credit unions are currently regulated under a one-size-fits-all approach, regardless of size or risk profile,” he said. “This means regulations designed and intended for big banks are also applied to small community and independent banks and credit unions, and posing compliance regimens and costs that many of them find unbearable.”
Witness Paul Kupiec, a resident scholar at the American Enterprise Institute, agreed with this approach, saying he thought it was a good idea to “put the regulatory agencies on notice that you do expect the rules to reflect the risk profile.”
The second CUNA-supported bill covered in the hearing was the Preserving Capital Access and Mortgage Liquidity Act (H.R. 2473), sponsored by subcommittee chair Rep. Randy Neugebauer (R-Texas) and ranking member Rep. Lacy Clay (D-Mo.). The bill would amend the Federal Home Loan Bank Act to ensure eligibility requirements for similarly sized credit unions and banks are the same by would including credit unions in the act’s definition of "community financial institution."
Witness Oliver Ireland said the bill would “promote credit union lending to smaller businesses, smaller farms and community development organizations, and I think that’s desirable.”
Many legislators and witnesses agreed with the approach taken by the National Credit Union Administration Budget Transparency Act (H.R. 2287), which would require the NCUA to hold public hearings and accept comment as part of its annual budgetary process.
Rep. David Scott (D-Ga.), one of the bill’s co-sponsors, said the bill would help build a more positive relationship between the NCUA and the credit unions it regulates.
“Our legislation would simply have the NCUA be held accountable for its budget, and would allow the credit unions they represent to take a more active role in its budget decisions,” he said. “I believe that our bill, with Rep. [Mick] Mulvaney [(R-S.C.), who introduced the bill] providing the leadership, will do just that.”
Ireland, a partner in the Washington, D.C.-based financial services firm Morrison and Foerster LLP, said the bill would add a sense of discipline to the NCUA’s budgetary process that might not be present at the moment.
“If you’re going to make your budget public, you’re going to solicit comment on your budget and you’re going to respond to your budget, that puts you through a discipline to justify what you’re doing,” he said. “It doesn’t cede control of the budget, it doesn’t mandate reduction within the budget. I think it adds discipline to the budgetary process, and I think the NCUA, and quite frankly the rest of the bank regulators, can only benefit from that kind of discipline.”