Credit union groups stake out reg relief priorities

The Credit Union National Association (CUNA) and National Association of Federally-Insured Credit Unions (NAFCU) have reached out to both ends of Washington to make their voices heard on issues such as rulemaking and examinations, equity between the credit union and banking industries, and relief in areas such as member business lending and CECL.

CUNA President and CEO Jim Nussle recently wrote to President Donald Trump to push priorities the association has for the credit union industry, saying credit unions are serving members on the front lines of helping keep others safe during the COVID-19 crisis.

“Given the severity of the crisis and the need for quick action to alleviate consumer financial disruption, CUNA is requesting that the administration, federal agencies and Congress:  

• Suspend all pending rulemakings – and not propose additional rulemakings – that will not provide regulatory relief for financial institutions at this time.
• Extend the effective dates for recently finalized regulations until 2021.  
• Suspend all routine onsite examinations for at least the next 120 days.
• Waive penalizations to credit unions implementing short-term emergency loan programs, skip-a-payment programs, loan modifications, fee waivers and other accommodations. 
• Receive permission from the National Credit Union Administration (NCUA) to allow virtual membership and board meetings.
• Suspend the Financial Accounting Standards Board (FASB) implementation of its current expected credit loss (CECL) standard for at least one year, until January 2024.
• Increase appropriations for the Community Development Revolving Loan Fund (CDRLF) and the Community Development Financial Institution Fund (CDFIF).
• Enact legislation to exempt credit union business loans made during federally declared disasters and emergencies from the credit union member business lending cap.
• Enact legislation to exempt government-guaranteed loans made through programs at the Small Business Administration, Department of Agriculture and other agencies from the credit union member business lending cap.
• Allow consumers to waive the rigid requirements related to the specific timing of disclosures (e.g. the three-day closing disclosure requirement) under the TILA-RESPA Integrated Disclosure (TRID) rule.
• Expedite the Consumer Financial Protection Bureau (CFPB) amendment to the Remittance Rule increasing the “normal course of business” safe harbor and make an accommodation for transfers sent to individuals affected by the growing pandemic.

“Credit unions are open for business and serving their members. Their top priority right now is keeping their members, volunteers and employees safe and healthy, and remaining in a position to serve members and the community during and after the crisis,” Nussle wrote.

NAFCU wrote to congressional leaders working on the latest stimulus package in the face of the coronavirus response, thanking them for their leadership and asking for their support of measures to help the industry with the response.

“First and foremost, we want to be clear that as Congress takes steps to ensure liquidity for banks, similar steps should be taken for credit unions, such as giving the National Credit Union Administration (NCUA) the access to necessary liquidity solutions. An important part of this effort is to make technical amendments to modernize the Central Liquidity Facility (CLF) at the NCUA so that credit unions can quickly access liquidity should they need to do so,” NAFCU President and CEO Dan Berger wrote.

Other areas which Berger pointed out that credit unions were looking for parity with the banking industry in legislation included the paycheck protection program, which appeared to cover banks but not credit unions because of a definition of financial institution that does not include credit unions; the Treasury program management authority, which appeared to cover banks but not credit unions for the same reason; Subsidy for certain loan payments, which covers banks and banking regulators but not credit unions and the NCUA; and Temporary relief for community banks, which provides capital flexibility for banks but not credit unions.

In addition, NAFUC cited a number of what it called “outdated provisions” which would help the industry during this business disruption.

“There are important policy changes that the government can take to help credit unions serve consumers during these uncertain times,” NAFCU wrote.

The association urged legislators to support the following measures:

• Provide relief from the outdated Credit Union Member Business Lending Cap
• Provide capital relief to credit unions
• Allow credit unions to do more to help underserved populations
• Modernize outdated governance provisions found in the Federal Credit Union Act
• Raise the 15-year maturity limit on certain credit union loans
• Modernize the E-SIGN Act
• Provide emergency funding for CDFI Institutions and the CDRLF
• Have federal financial regulators provide immediate regulatory relief:
  • Extend examination cycles for all credit unions in good standing. Currently credit unions below $1 billion in good standing are eligible for extended exam cycles.
  • Extend all upcoming mandatory compliance deadlines for at least 18 months, unless the regulation is in response to the current situation or includes regulatory flexibility.
  • Allow credit unions to conduct all board meetings or member meetings virtually. In-person meetings would likely violate the current 10-person limit recommended by the CDC.
  • Require the CFPB and the NCUA provide flexibility to credit unions who work with their members to assist with COVID-19 relief. This includes capital level forbearance, waiving certain timing requirements at the request of the consumer, and not penalizing credit unions who make good-faith efforts to help their members.

“During times of economic crisis, credit unions always focus on their members and doing all that they can to help,” Berger wrote. “We are pleased that the NCUA has expressed flexibility during these difficult times, and we would urge you to support steps outlined in this letter to help credit unions.”

Finally, Nussle wrote to Consumer Financial Protection Bureau Director Kathy Kraninger after a recent meeting to express his thanks and reiterate talking points from their meeting.

“On behalf of the Credit Union National Association, I am writing to thank you for taking the time to speak with me regarding the COVID-19 pandemic and its impact on the consumer financial services marketplace,” Nussle stated. “This letter reiterates some suggestions made during our conversation and outlines additional actions the Consumer Financial Protection Bureau can take to be of assistance to credit unions as they help affected members.”

Nussle began by discussing the social distancing policies many offices have taken as the virus has spread around the country.

“These policies have resulted in many employers, including financial institutions, to adopt broad telework policies or to reduce staffing,” he wrote. “In addition, employers are embracing for the likelihood that employees may fall ill and be unable to work entirely. As a result, it is likely that many credit unions and third-party service providers are going to be operating short-staffed or with skeleton crews for a prolonged period.”

The staffing issues could cause processes to slow or temporarily stop, Nussle stated.

“Anticipating a likely short-staffing issue, CUNA recommends the CFPB act to provide flexibility for credit unions’ regulatory compliance responsibilities to ensure consumers are still able to access financial products and services if staff resources become in short supply,” he stated.

These recommendations include:

• Avoid finalizing or implementing any new rules or initiatives that would add to burden or strain compliance resources;
• Reduce onsite routine examinations so that credit union employees are not required to be in the office for unnecessary lengths of time and can dedicate their work time to focusing on serving members;
• Consider pushing back or providing extensions for any 2020 filing deadlines, including Home Mortgage Disclosure Act reporting, credit card account agreement reporting, and others;
• Adopt a policy of “good-faith efforts toward substantial compliance” during the compliance examination process once routine examinations resume after the pandemic;
• Allow consumers to temporarily waive disclosure timing-requirements under the TRID rule (e.g. the three-day closing disclosure requirement); and
• Provide temporary flexibility for disclosures and application processing timelines related to loss mitigation efforts, especially for COVID-19 related loan modifications, forbearance agreements, and repayment plans.