CUNA cites reg. D, remote deposit capture concerns in EGRPRA letter

May 14, 2015

WASHINGTON (5/14/15)--CUNA reiterated concerns it has with withdrawal or transfer limits on savings accounts and proposed changes for remote deposit capture in a letter to federal regulators Wednesday. The letter was sent to the Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, which sought feedback as part of their Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) review.

The EGRPRA review requires federal regulators to identify outdated or otherwise unnecessary regulatory requirements imposed on insured depository institutions. The National Credit Union Administration is not required to participate, but does so voluntarily in a separate notice from the other agencies, and it reviews one-third of its regulations each year.

CUNA emphasized the importance of regulatory relief for credit unions in its letter, citing numerous compliance burdens that take away from credit unions’ mission to serve the needs of their members.

Regulation D, which imposes reserve requirements on depository institutions, has been the subject of CUNA focus in recent years. Specifically, the section that limits depositors to making six withdrawals per months out of a savings account, which can lead to rejected transactions and potential nonsufficient funds fees.

“The policy reasons behind Regulation D have outlived their purpose, and Regulation D in its current form is ineffective for both members and credit unions,” reads CUNA’s letter, signed by Senior Director of Advocacy and Counsel Leah Dempsey.

CUNA supported a bill last Congress that would have directed the Government Accountability Office to examine the effects of Regulation D. The bill passed the House last Congress, and did not go any further, but the GAO is undertaking the study.

“CUNA is pleased that GAO is conducting the study and we are confident it will conclude that Regulation D is not necessary for credit unions,” the letter reads.

CUNA also weighed in on the proposed changes from the Fed to change Regulation CC, which pertains to remote deposit capture (RDC). The proposal provides two alternate frameworks for return requirements to encourage institutions that currently request paper returns to transition to electronic returns.

“Credit unions have concerns that the proposed changes would increase risks for institutions offering RDC,” the letter reads. ‘’Financial institutions offering RDC have generally taken steps to reduce the risk of duplicate presentments and the likelihood that other institutions will deposit the paper check again after they have honored it.”

The letter adds that there could be unintended consequences from the proposal, such as potential reductions in RDC services for consumers and businesses. CUNA urges the Fed to fully assess and minimize any such consequences.