THANK YOU TO OUR SPONSORS FOR THEIR OUTSTANDING SUPPORT

AGENDA

Tuesday, Sept. 6th
Leagues’ Hike The Hill Virtual Briefing:

Tuesday, Sept. 13th
Special event sponsored by American Share Insurance; please arrive before 5 p.m. (Eastern):

  • 5:30 p.m. (Eastern)
    Limited-ticket Washington Nationals baseball game with the California & Nevada Credit Union Leagues and Ohio Credit Union League.

Wednesday, Sept. 14th
Congressional office visits:

  • 9 a.m. – 5 p.m. (Eastern) — Appointment scheduling is ongoing. Click here for in-person schedule.

Thursday, Sept. 15th
Regulator visits:

  • 9:30 – 10:30 a.m. (Eastern) — Meeting/discussion with National Credit Union Administration (NCUA) Chair Todd Harper.
  • 11 a.m. – 12 p.m. (Eastern) — Meeting/discussion with Consumer Financial Protection Bureau (CFPB) staff.
  • 2 p.m. (Eastern) — Depart from Washington, D.C.

Location for both meetings:  Credit Union House, 403 C St NE, Washington, DC 20002, CO-OP Conference Room

For event questions, email Jeremy Empol. For registration and hotel questions, email Carmelita Keller.

Schedule Subject to Change.

LEAGUE STAFF CONTACTS

CREDIT UNION FACTS

  • 132 million American consumers (more than 13.3 million in California and more than 382,000 in Nevada) rely on credit unions for their financial wellbeing.
  • Credit unions are doing everything in their power to aid members and communities. This comes from our commitment to service.
  • Every day — before this crisis and throughout the pandemic — we advance our not-for-profit, collaborative mission.
  • Our 7.5 percent market share of the entire financial services marketplace means there is always more we can do.
  • Nationally, we provide $18.5 billion in direct and indirect benefits to the consumer, outweighing our $2 billion price tag for the credit union tax status.
  • $13.6 billion is directly returned to credit union members in the form of annual savings.
  • $5.3 billion is returned to non-credit union members simply from credit unions being in the financial services marketplace.
  • Credit unions pay nearly $29 billion annually in local, state, and other federal taxes.
  • Credit unions provided 376,000 Paycheck Protection Program (PPP) loans totaling $15.5 billion in lending.
  • Credit unions also serve underserved markets and keep assets local as for-profit lending has shifted from Main Street to Wall Street.

CONGRESSIONAL OVERVIEW

2022 has been one of the most active and successful years in federal credit union advocacy for quite some time. The combination of a strong House Financial Services Committee Chairwoman (Rep. Maxine Waters — D, Los Angeles), the National Credit Union Administration agreeing with elements of our agenda, and a successful and unified credit union voice have all led to this moment.

This year’s Hike the Hill will take place just under two months before the 2022 mid-term elections, which will then afford a lame-duck session of Congress. This is the opportunity for credit unions to “clear the deck” on our agenda, as many of our measures are consensus bills. However, this will take a lot of work, which is the purpose of this Hike the Hill.

At the same time, while we have many opportunities to advance our proactive measures, credit unions must be on guard against harmful legislation that could move under the same circumstances. Threats to credit card interchange fees, data and privacy legislation that needs amending, and several other issues have emerged during this period.

Messages to Capitol Hill must now be crafted in a sense of how they provide inclusion, access, and most of all affordability to the consumer during this high inflationary period.

CONGRESSIONAL DELEGATIONS

As a reminder, our delegations have 53 House of Representatives seats from California and four from Nevada, all of which have some role linked to our presence in the communities they represent. Each state has two senators. California has our newest senator, Alex Padilla, who has a strong history of being a credit union champion. In his brief time in office, he has co-sponsored several credit union bills and worked with us on issues behind the scenes. Senator Dianne Feinstein remains a close friend of credit unions, especially on issues pending from the Senate Judiciary Committee.

In Nevada, Senator Catherine Cortez Masto is the strongest positioned from our two states altogether. As a member of the Senate Banking Committee, as well as a Deputy for Majority Leader Chuck Schumer, the senator has authored a bill for credit unions and continues to support many of our legislative efforts.

Senators Padilla and Cortez Masto are up for reelection in November.

Rep. Maxine Waters (D-CA, Los Angeles) is the Chairwoman of the House Financial Services Committee (the home turf for credit unions), and Rep. Brad Sherman (D-CA, Sherman Oaks) remains the subcommittee Chairman of Investor Protection, Entrepreneurship and Capital Markets. Rep. Juan Vargas (D-CA, Chula Vista) is the remaining member of the House Financial Services Committee. Credit union issues typically fall to three House committees of jurisdiction: Financial Services, Energy and Commerce (data security), and Ways and Means (taxes).

As noted, Chairwoman Waters has been exceptional for credit unions this session. Not only has she endorsed our charter modernizations, one of which has become law, she is the author of H.R. 7003. This bill is the single largest expansion of credit unions’ field of membership since 1998. See more on this under the Legislative Issues section below.

After aggressively lobbying the House Ways and Means Committee in autumn of last year, credit unions should be familiar with its representatives: Mike Thompson (D-CA, Napa) is the subcommittee Chairman of Select Revenue (taxes), and Linda Sanchez (D-CA, Cerritos), Judy Chu (D-CA, San Gabriel), Jimmy Panetta (D-CA, Salinas), Jimmy Gomez (D-CA, Los Angeles), and Steven Horsford (D-NV, North Las Vegas) all retain their seats. Mr. Horsford was a key player in connecting credit unions and the U.S. Treasury Department to defeat the proposed increase in IRS reporting requirements. Rep. Lou Correa (D-CA, Santa Ana) was also a key player as he organized the letter of 21 representatives to oppose that title of the bill. This informed the Democratic Leadership that it didn’t have the votes to pass the provision. Be sure to thank Rep. Horsford and Rep. Correa for their efforts!

This will be the last year advocating at a few offices. Several members of the California Delegation have announced they are leaving Congress. One member, Rep. Devin Nunes (R-CA, Tulare), has already resigned. The district has elected Rep. Connie Conway to fill the vacancy; however, with California losing a seat in the redistricting process, Rep. Conway does not have a district friendly to reelection. The others who will not be seeking reelection include: Reps. Jackie Speier (D-CA, San Mateo); Lucile Roybal-Allard (D-CA, East Los Angeles); Alan Lowenthal (D-CA, Long Beach); Karen Bass (D-CA, Los Angeles); and Jerry McNerney (D-CA, Stockton).

MEETING PREPARATION

The Leagues encourage you to use the following important facts and figures in preparing for your congressional visits. Drafting a one-page “leave behind” sheet with this information can be very effective. Plan to bring this with you, or email it to the congressional staffer following the meeting.

Your ‘Leave Behind’ Should…

  • List any basic “pedigree” information about your credit union: size, membership, charter type, assets, basic product offerings, and branch locations.
  • If you are a Minority Depository Institution (MDI), Community Development Financial Institution (CDFI), and/or a low-income designated credit union (LICU), please explain and elaborate on your programs.
  • Detail benefits of our tax exemption, showing your credit union’s give-back and direct return of value to your members and the community. Please categorize this area as “financial wellbeing.” Policymakers expect entities to demonstrate how they are serving their constituents during the pandemic (and beyond).
  • Offer to be a resource for constituent case work dealing with pandemic financial issues.
  • Provide information on your credit union’s greater financial wellbeing efforts, such as lower cost of fees, expanded services to low-income or rural communities, details and numbers regarding financial services workshops, and examples of programs that directly and indirectly impact various communities within your membership.
  • Include your name, phone number, and email address — all in large font (16-point recommended).

The Leagues’ meeting script provided below will outline the basics, allowing you to then offer information about legislative impacts on your credit union. Our advocacy team will ensure follow-up. Each congressional meeting will run 25 – 30 minutes. REMINDER: team leaders are assigned by the Leagues as guides to help maximize your time spent, and everyone is encouraged to speak and participate.

LEGISLATIVE ISSUES

The Leagues routinely meet with members of Congress to discuss all legislative matters relating to credit unions. Most members and staff have been briefed on our short-term, mid-range, and long-term goals. The Leagues’ “priorities letter” for California and Nevada is included herein. This is the same letter that will be sent to congressional staff ahead of time. The meeting script and letter reflect almost identical messaging. Everyone should read the letter ahead of meetings to best understand how to guide the meeting.

Additionally, please download our Hike The Hill virtual briefing/meeting calendar reminder for Tuesday, Sept. 6th at 10 a.m. and plan to participate.

This Hike the Hill will focus on the following issues:

  • Creating a 21st Century federal credit union charter.
  • Securing consumers’ data.

Background, Script, & Sound Bites
The following background information is provided for you to understand the issues. The meeting script is a summary of this information. The sound bites are for items that may answer a specific question, should they come up again.

BACKGROUND & DETAILS

A 21ST Century ‘Federal Credit Union Act’
As mentioned above, 2022 has been a very active year in legislating for credit union advancements.

Even in this hyper-partisan environment within Congress, our legislative issues have stood out to become not only bipartisan but post-partisan. Consensus exists in modernizing the charter. However, there is still work to be concluded, and that is where we begin.

The first point to note — while we are advocating for modernizations to the federal charter — is that state-chartered credit unions already have most of these powers. Thus, the state charter participation is key to demonstrate that any modernizations are effective, consumer friendly, and exist to aid the cooperative in further growth.

The last time Congress overhauled the Federal Credit Union Act was in 1998. The way people access and use their money has come a long way, and it’s time to let credit unions serve our members with 21st-Century solutions.

With several pieces at various stages of the legislative process, it is good to have a full picture of what action remains.

H.R. 7003
The Expanding Financial Access for Underserved Communities Act:

  • Authors: House Financial Services Committee Chairwoman Maxine Waters (D-CA) and Rep. Ed Perlmutter (D-CO).
  • Status: Advanced from the House Financial Services Committee and was rolled into H.R. 2543, a larger package on racial equity as it relates to financial services. That bill is pending in the Senate. Credit unions are advocating only the passage of H.R. 7003 in the Senate and not the remaining elements. We are currently working with various senators to have Senate introduction, which can then be conferred back to the House.

Policy details: Currently, field-of-membership restrictions could have a credit union refuse services to individuals, especially those in rural, low-income, or traditionally underserved communities. This legislation removes that barrier by allowing a credit union to grant membership to individuals if they meet one of the following criteria:

  • Reside in a poverty zone as defined by the Community Development Financial Institutions Act.
  • Reside in a low-income community as defined by the New Markets Tax Credit Program.
  • Reside 10 miles from the closest financial institution branch, which makes up a considerable portion of rural and banking deserts across the nation.

The bill also permits unlimited business lending authority for all credit unions (both state and federally) in these areas.

Credit unions have a proven track record of serving these diverse groups within our respective fields of membership:

  • More than 50 percent of credit unions focus on serving low-income individuals according to the National Credit Union Administration (NCUA).
  • More than half of credit union-originated home loans go to borrowers earning middle income or less according to the Consumer Financial Protection Bureau (CFPB).
  • 3.6-times as many credit unions versus banks serve specific minority communities according to the NCUA, Federal Deposit Insurance Corp. (FDIC), and Credit Union National Association (CUNA).
  • 70 percent of credit union branches are located in middle, moderate, and low-income communities according to the NCUA, U.S. Census Bureau, University of Wisconsin’s Applied Population Laboratory, and CUNA.
  • 35 percent of credit unions are in Community Development Financial Institution (CDFI) investment areas according to the NCUA, U.S. Census Bureau, University of Wisconsin’s Applied Population Laboratory, CUNA, and CDFI.

The first credit union in the United States was established to serve loggers who had been denied service by a local bank. Serving the underserved is the core of our mission, and our member-owned structure keeps us accountable to the communities we operate in. We know that together, we can build a stronger and more inclusive financial future. To create a more equitable and inclusive financial system, Congress must expand access to trusted, regulated, and proven financial partners. Credit unions stand ready to fill that role, just as we always have.

H.R. 5189 / S.762
Member Business Loan Expansion Act and the Expanding Access to Lending Options Act:

  • Authors (House): Reps. Vicente Gonzales (D-TX) and Brian Fitzpatrick (R-PA).
  • Authors (Senate): Sens. Tim Scott (R-SC) and Catherine Cortez Masto (D-NV).

Policy details: While these are different bills addressing the same issue, they allow covered credit unions to increase and offer certain loan products with maturities of 20 years or greater. Currently, almost all state-chartered credit unions have this authority; however, federally chartered credit unions do not. There is no rhyme or reason for this maturity limit. Both California and Nevada state-charted credit unions can, and do, make these loans above the existing cap. The ability to provide up to 30-year terms allows for lower payments and participation in the marketplace. These loans typically apply to non-owner-occupied residential mortgages, boat or recreational vehicles, agricultural loans, and student loans.

This bill is a market-based solution that simply requires Congress to grant the authority, with no cost to the taxpayer.

H.R. 6889 / S. 4325
The Credit Union Board Modernization Act:

  • Authors: Reps. Juan Vargas (D-CA) and Anthony Gonzalez (R-OH).
  • Status: Pending on the House Floor. On July 27th, the House Financial Services Committee advanced the bill to the House Floor by voice-vote.
  • Co-Sponsors: 90 bipartisan members of Congress, including all four from Nevada and 28 of 53 from California.

Policy details: This bill provides parity with state-chartered credit unions by allowing federally chartered credit unions to remove the monthly board meeting requirement and move to one per quarter, and no fewer than six per year. This is simply an outdated provision that has been adjusted in states but not by Congress.

The bill exempts De Novo Credit Unions in their first five years of operations, as well as credit unions with a low CAMELS score (Capital Adequacy / Asset Quality / Management / Earnings / Liquidity / Asset-Liability Management / Sensitivity to Market Risk). A qualifying credit union must also have high marks on the “Management” portion of the score.

Our “Ask” of Congress: 

  • Please support our legislative package, as we have made considerable strides in working to modernize the federal charter. Please co-sponsor, vote in favor, and inform your leadership of your support for these bills.

Securing Consumers’ Data
There can be no data privacy until there is data security.

There are multiple issues surrounding this topic, including a national data privacy/security bill and a bill regulating credit card interchange. The facts are simple:

  • Consumers try to protect their finances and are frustrated with endless headlines of data breaches.
  • Merchants, physical and online, want access to endless consumer data. However, they take little responsibility to secure this information, including their method of payments.
  • Consumers blame their financial institution when a breach occurs since the institution is responsible for making the consumer whole.
  • The merchant and retail lobby continues to mislead Congress into thinking that the convenience fees they pay to accept payment cards should be shifted to financial institutions.
  • Congress is currently considering data privacy and credit card interchange measures (separately), which both greatly impact our view that there can be no data privacy until there is data security.

Below outlines the two issues and how they are co-mingled.

H.R. 8152
The American Data Privacy and Protection Act (ADPPA):

  • Authors: Reps. Frank Pallone (D-NJ) and Cathy McMorris Rodgers (R-WA) — respectively, Chair and Ranking Member of the House Energy and Commerce Committee.
  • Status: Pending on the House Floor. On July 20th, the bill advanced from the House Energy and Commerce Committee by a vote of 53-2. Of California’s seven seats on the committee, all but two representatives (Anna Eshoo and Nanette Barragan from California) objected. Nevada does not have a representative on this committee.

Policy details: Credit unions strongly support the enactment of a national data security and data privacy law that includes robust security standards that apply to all who collect or hold personal data and is preemptive of state laws.

Credit unions support the approach of this bill; however, there are concerns with the current bill that we would like to see addressed.

H.R. 8152 advanced out of the House Energy and Commerce Committee on July 20th, 2022. The next stop is a full House vote, which has not yet been scheduled.

This bill has the support of Reps. Frank Pallone and Cathy McMorris Rodgers, as well as Sen. Roger Wicker of the Senate Commerce Committee. However, Sen. Maria Cantwell, the Chair of the Senate Commerce Committee, remains strongly opposed, thus severely dampening its prospects of moving through the Senate.

Credit unions support the approach of this bicameral, bipartisan bill (ADPPA) that addresses both data security and data privacy. There can be no data privacy until there is strong data security.

Credit unions support the broad inclusion of all entities handling consumer data and the use of enforcement measures to hold bad actors accountable.

Changes to the ADPPA that would benefit credit unions include:

  • Expanding The Graham-Leach-Bliley Act (GLBA) Exemption: The existing GLBA requires credit unions to comply with stringent information security and privacy practices to protect member data. Credit unions are reviewed for these practices on their annual safety and soundness examination. These requirements are strengthened via strict oversight by state and federal regulators and robust enforcement for violations.

    The requirements of H.R. 8152 are duplicative of the protections provided by the GLBA and would compound the regulatory burden on credit unions. We ask that compliance with the strong security and privacy standards of the GLBA and its implementing regulations be deemed compliant with H.R. 8152.

  • Completely Preempting State Privacy Law: It is crucial that a comprehensive national framework is preemptive of state data privacy laws. The current patchwork of state laws perpetuates a security system littered with weak links and leaves entities and consumers on unequal footing in protecting data. All state privacy laws should be completely preempted to ensure a single rule of the road that allows for clear guidance and authority to which covered entities are subject and to prevent confusion as to the rights of consumers.

    For California, because of the California Consumer Privacy Act (CCPA) and the sizable representation of California members of Congress on the committee, several amendments and conversations went into how to treat CCPA under this measure. The initial concept was to write the bill to the CCPA’s standard; however, to gain bi-partisan support, it was omitted. The current preemption language has a specific carve-out for California’s law. If H.R. 8152 were to become law, it would lead to duplicative compliance. Thus, credit unions support fully preempting all state laws.

  • Extending the Cure Period to all Enforcement Actions: Credit unions ask that the 45-day cure period for private rights of action be extended to all enforcement actions, including those brought by the Federal Trade Commission (FTC) and state attorneys general. There will be a learning curve for implementation of this comprehensive national standard, and unintentional violations may occur. Allowances should be made for good-faith efforts by covered entities to cure perceived violations and will aid in adherence to the aims of this act.
  • Modifying Data Security and Privacy Officer Requirements: We have serious concerns about the feasibility of implementing this provision and the financial burden it would impose on credit unions. There is already a shortage of qualified employees in this space, and the addition of this requirement would quickly exhaust the system and drive up the market rate for these positions, pricing out not-for-profit credit unions.

S.4674
Regulating credit card interchange fees:

  • Authors: Sen. Richard Durbin (D-IL), Chair of the Senate Judiciary Committee, and Sen. Rodger Marshall (R-KS).
  • Status: Pending consideration in the Senate Banking Committee. Sen. Richard Durbin is working with a small coalition to seek introduction in the House.

Policy Details: While H.R. 8152 can be amended (see above), S. 4674 is a measure that credit unions outright oppose. Whether it’s the promise of cheaper costs on small businesses or on the consumer, Senator Durbin’s bill is nothing more than shifting one cost and reducing what little data security currently exists.

Credit cards are a fundamentally different product than debit cards. Credit cards are an extension of unsecured credit to a consumer, meaning financial institutions make a loan to a consumer every time a credit card is used to purchase goods or services from a retailer. This credit card network allows retailers to avoid the cost of processing transactions, offering quick guaranteed payment. This increases the number and value of their sales. Interchange is the cost of doing business.

Routing mandates on credit cards will lead to less secure, less innovative, and higher-risk transactions for American consumers. This time, new credit routing mandates are being proposed that would give retailers — not consumers — the power to decide which credit card network is used, all to increase the bottom line of mega-retailers. Consumers, small businesses, and small community financial institutions will lose the most if this happens.

  • This legislation will hurt consumers. Consumer choice for credit cards would disappear. Instead of preserving consumers’ choice in their trusted card network, S.4676 would put that decision in the hands of retailers. With only their bottom line as motivation (due to the protections provided by financial institutions through the interchange system), the retailer will choose the cheapest — not the most secure — option. Approximately 86 percent of consumers use credit cards because they feel their information is secure from data breach. Consumers have a wide variety of cards, processors and issuing institutions to choose from, and their choice must be respected.
  • Cybersecurity will be at risk. If retailers are allowed to simply choose the cheaper networks that haven’t invested in the latest security technology, consumer payment data will be vulnerable to foreign networks.
  • Prices will rise for consumers. Establishing a dual-routing system will represent a significant expense that raises costs for consumers. The Federal Reserve Bank of Richmond determined that over 20 percent of retailers increased their prices following enactment of the Durbin Amendment on debit interchange, and only 1 percent of retailers passed their savings to consumers.
  • Exemption failures due to lower interchange. While the initial draft bills appear to exempt financial service providers under $100 billion in assets, credit unions know from the Durbin debit-interchange in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that market forces drive overall interchange lower, and that the exemption will eventually fail.
  • This legislation disproportionately harms small financial institutions. Interchange is established as a convenience cost to cover retail data breaches. Smaller financial institutions will see reduced flow of interchange due to this proposal. Recent Federal Reserve data shows community banks and credit unions also face higher costs as a result of these price controls. These institutions typically have a lower number of debit transactions than covered issuers. This means it is more difficult for them to absorb costs compared to larger issuers with a higher number of transactions. Due to their reduced revenue after the Durbin Amendment on debit interchange, community banks and credit unions (the so-called “exempt” issuers) have less funds to mitigate retail data breaches.

Our “Ask” of Congress:

  • Data privacy and security is a serious issue, especially when securing the finances of the American public. First, please consider responsible amendments to H.R. 8152. Second, please oppose S. 4674.

CA & NV LEAGUES’ ‘PRIORITIES’ LETTERS

CA League’s Priorities Letter
The California Credit Union League’s “priorities” letter highlights our goals and is included in the materials already received and reviewed by many members of Congress and/or their staff aides. This letter and our meeting script reflect almost identical messaging. Everyone should read this letter ahead of meetings to best understand how to guide their meeting.

NV League’s Priorities Letter
The Nevada Credit Union League’s “priorities” letter highlights our goals and is included in the materials already received and reviewed by many members of Congress and/or their staff aides. This letter and our meeting script reflect almost identical messaging. Everyone should read this letter ahead of meetings to best understand how to guide their meeting.

CONGRESSIONAL MEETING SCRIPT

Please remember: these meetings are about credit union issues. We have limited time and need to focus on our objectives.

Introductions (under 5 minutes)
Introductions should be brief. You should provide:

  • Your name and title/position.
  • Your credit union (include whether you represent a CDFI, MDI, or LICU).
  • The number of members your credit union serves in the district.
  • Your credit union’s field of membership.
  • Your credit union’s service area.
  • Whether you are a constituent (please note).

A 21st Century ‘Federal Credit Union Act’ (10 minutes)
The last time Congress overhauled the Federal Credit Union Act was in 1998. Banking, even for credit unions, has changed. Credit unions have had some success in advancing bills, even getting one into law during this cycle.

With the clock ticking, we have a few bills left to finish this session. They include:

H.R. 7003The Expanding Financial Access for Underserved Communities Act:

  • Authors: House Financial Services Committee Chairwoman Maxine Waters (D-CA) and Rep. Ed Perlmutter (D-CO).
  • Status: Advanced from the House Financial Services Committee and was rolled into H.R. 2543. That bill is pending in the Senate.
  • During the bill’s mark-up, Chairwoman Waters said it best: “Nothing stops the banks from serving these areas, and it’s time to let credit unions do it too.”
  • The bill allows federally chartered credit unions serve these three areas regardless of their field of membership: individuals residing in a poverty zone, in a low-income community as defined by the New Markets Tax Credit Program, or 10 miles from the closest financial institution branch.
  • The bill also permits unlimited business lending authority for all credit unions (both state and federally chartered) in these areas.
  • Credit unions have a proven track record of serving these diverse groups within our respective fields of membership.
  • More than 50 percent of credit unions focus on serving low-income individuals according to the National Credit Union Administration (NCUA).
  • More than half of credit union-originated home loans go to borrowers earning a middle income or less according to the Consumer Financial Protection Bureau (CFPB).
  • 3.6-times as many credit unions versus banks serve specific minority communities according to the NCUA, Federal Deposit Insurance Corp. (FDIC), and Credit Union National Association (CUNA).
  • 70 percent of credit union branches are located in middle, moderate, and low-income communities according to the NCUA, U.S. Census Bureau, University of Wisconsin’s Applied Population Laboratory, and CUNA.
  • 35 percent of credit unions are in Community Development Financial Institution (CDFI) investment areas according to the NCUA, U.S. Census Bureau, University of Wisconsin’s Applied Population Laboratory, CUNA, and CDFI.

H.R. 5189 / S. 762Member Business Loan Expansion Act and the Expanding Access to Lending Options Act:

  • Authors (House): Reps. Vicente Gonzales (D-TX) and Brian Fitzpatrick (R-PA).
  • Authors (Senate): Sens. Tim Scott (R-SC) and Catherine Cortez Masto (D-NV).
  • While these are different bills addressing the same issue, they allow covered credit unions to increase and offer certain loan products with maturities of 20 years or greater.
  • With the high cost of lending due to rising interest rates, the best way to help consumers is let them have longer maturities.
  • Currently, federally chartered credit unions are maxed at 15 years for non-mortgage loans.
  • Almost all state-chartered credit unions have authority to go up to 30 years.
  • There is no rhyme or reason for this maturity limit.
  • This bill is a market-based solution that simply requires Congress to grant the authority, with no cost to the taxpayer.

H.R. 6889 / S. 4325The Credit Union Board Modernization Act:

  • Authors: Reps. Juan Vargas (D-CA) and Anthony Gonzalez (R-OH).
  • Status: Pending on the House Floor. On July 27th, the House Financial Services Committee advanced the bill to the House Floor by voice-vote.
  • Co-Sponsors: 90 bipartisan members of Congress, including all four from Nevada and 28 of 53 from California.
  • This bill provides parity with state-chartered credit unions by allowing federally chartered credit unions to remove the monthly board meeting requirement and move to one per quarter, and no fewer than six per year.
  • This is simply an outdated provision that has been adjusted in states but not by Congress.
  • H.R. 6889 passed by voice-vote from the House Financial Services Committee.
  • It should be on the House Floor in September. We are hoping to see it move from the Senate.
  • California Sens. Alex Padilla and Dianne Feinstein are co-sponsors of the Senate version.

Our “Ask” of Congress:

  • Please support our legislative package, as we have made considerable strides in working to modernize the federal charter. Please co-sponsor, vote in favor, and inform your leadership of your support for these bills.

Securing Consumers’ Data (10 minutes)
There can be no data privacy until there is data security:

  • Consumers are trying to protect their finances and frustrated with endless headlines of data breaches.
  • Merchants (physical and online) want access to endless consumer data. However, they take little responsibility to secure this information, including their method of payments.
  • Consumers blame their financial institution when a breach occurs since the institution is responsible for making the consumer whole. That has a cost.
  • The merchant and retail lobby continues to mislead Congress into thinking that the convenience fees they pay to accept payment cards should be shifted to financial institutions.
  • Congress is currently considering data privacy and credit card interchange measures (separately), which both greatly impact our view that there can be no data privacy until there is data security.

H.R. 8152The American Data Privacy and Protection Act (ADPPA):

  • Authors: Reps. Frank Pallone (D-NJ) and Cathy McMorris Rodgers (R-WA).
  • Status: Pending on the House Floor. On July 20th, the bill advanced from the House Energy and Commerce Committee by a vote of 53-2.
  • Credit unions strongly support the enactment of a national data security and data privacy law that includes robust security standards that apply to all.
  • Credit unions support the approach of this bill; however, there are concerns.
  • Expanding The Graham-Leach-Bliley Act (GLBA) Exemption: Credit unions already comply with stringent information security; thus, please ensure we are fully exempted.
  • Completely preempting state privacy law: In short, there needs to be one national data security standard — not 50 individual versions.
  • For California, because of the California Consumer Privacy Act (CCPA), it would be duplicative law. Simply exempt all existing compliant entities.
  • Extending the cure period for all enforcement actions to 45 days.

S. 4674 — Regulation of credit card interchange fees:

  • Authors: Sen. Richard Durbin (D-IL), Chair of the Senate Judiciary Committee, and Sen. Rodger Marshall (R-KS).
  • Status: Pending consideration in the Senate Banking Committee. Senator Durbin is working with a small coalition to seek introduction in the House.
  • In 2010, the Durbin interchange fee amendment was attached to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
  • The hope was to regulate swipe fees paid by merchants, with the promise of lowering prices.
  • Prices have not — or ever have — been reduced, as confirmed by the Consumer Financial Protection Bureau (CFPB) in the previous president’s administration.
  • Senator Durbin is now attempting to do the same to credit card transactions.
  • Credit cards are a fundamentally different product than debit cards.
  • Credit cards are an extension of unsecured credit to a consumer.
  • For the convenience of being paid instantly and assuming no data security requirements, retailers pay interchange.
  • Visa, MasterCard, and other networks establish these fees.
  • Credit unions use to them to offset data security and fraud losses. Everyone has been made whole by their financial institution at least once.
  • The initial bill contains an exemption for smaller financial institutions; however, it fails to accurately encapsulate the market forces behind these fees.
  • In short, this bill is designed to harm smaller financial institutions to pad the bottom line of the nation’s largest retailers such as Walmart, Walgreens, and other national market players.

Our “Ask” of Congress:

  • Data privacy and security is a serious issue, especially when securing the finances of the American public. First, please consider responsible amendments to H.R. 8152. Second, please oppose S. 4674.

CREDIT UNION SOUND BITES

Below are some suggested sound bites and elevator-speech messages that will be useful for your conversations with members of Congress and staff. Please fill in your data, but do not feel it has to be accurate to the exact percent. In fact, a good sound bite is to acknowledge you are “rounding” the data.

Wellbeing and Inclusion
Credit unions provide accessible and affordable basic financial services to people of all means and encourage the equitable distribution of capital across all individuals, families, communities, and small businesses. Our mission enables us to continue the work of improving our members’ financial wellbeing and advancing the communities they serve. Congress can improve on this by removing operational barriers, modernizing the credit union charter, and eliminating archaic rules designed to exclude participation in a credit union.

Tax Status
Our concern is making sure there’s not a single bill to tax credit unions. We need congressional leaders to be prepared to step up and speak up for credit unions, recognizing the role we continue to play in the community. Credit unions work to create greater financial wellbeing for all, and this includes times when the U.S. dollar is stretched to its maximum.

In dollar terms, the credit union tax status amounts to five hours of running and operating the U.S. government out of one whole calendar year. Meanwhile, credit unions return roughly $19 billion annually to communities across the nation each year. Regardless of size and scope, a credit union is a not-for-profit cooperative financial institution, operated by volunteers and owned by those who use it. 

Postal Banking
To expand consumers’ access to more banking options, credit unions admittedly support and are diligently working toward the goal of expanding banking access. But we have grave reservations about proposals to leverage the U.S. Postal Service or create a public bank to achieve this goal. 

Cannabis Banking
Providing financial services for cannabis-related businesses is a choice for each individual credit union, and only a few are offering these services until there is a change in federal law. Nationally, credit unions support the SAFE Banking Act, as well as the STATES Act, both of which would take steps to provide a safe harbor on this product line. 

Cryptocurrency and Digital Assets
Consumers trust their credit unions to provide them with safe, affordable products and services. Credit unions should be able to extend that relationship into the cryptocurrency space. Furthermore, other cryptocurrency and digital asset providers should be regulated in a manner consistent with credit unions and other similar financial providers.

Fintechs
Decades of strong regulatory oversight have built a financial system that many consumers trust to balance risk with growth. Congress must hold fintech companies to this same rigorous oversight, preventing them from engaging in regulatory arbitrage.

Preventing Banking Deserts
The No. 1 reason a credit union acquires a bank is because banks trust credit unions to stay local. They know credit unions almost always preserve bank branches — and retain their employees — thus preventing the creation of possible banking deserts. Approximately 23 percent of branch closures since 2017 have been in low- and moderate-income neighborhoods.

Prompt Corrective Action (PCA) Flexibility
There are many lessons to be learned from the COVID-19 pandemic. Credit unions are America’s trusted partner for financial services, and during times of flight-to-safety they experience temporary balance sheet issues. The multitude of stimulus checks and limited spending created a need for flexibility in how credit unions are regulated under PCA laws. The National Credit Union Administration’s (NCUA) expertise in granting limited pandemic-era compliance flexibility would allow credit unions to support consumers when they most need it and should be considered.

Consumer Financial Protection Bureau (CFPB) Leadership
When regulations change due to a new administration, credit unions must shift resources away from consumers to catch up. A diverse commission would create a strong, stable, and consistent environment for financial institutions and consumers.

Policies Tailored to Fit Credit Unions’ Unique Model
As not-for-profit cooperatives, credit unions should not be subjected to standards designed to reign in the poor practices of large Wall Street entities. Rules affecting credit unions should be informed by the National Credit Union Administration (NCUA), which has a stronger understanding of our unique needs and abilities.

Housing Affordability
For consumers incorporating homeownership into their financial journey, credit unions are a critical partner to a safe, equitable, and stable experience. Credit unions can empower low- and moderate-income homeowners who may not be able to secure affordable, fair, and sustainable mortgages from other creditors.

Credit unions support equal access to the secondary mortgage market for lenders of all sizes. This provides consumers with more options when choosing a mortgage partner. Credit unions also support affordable and reliable mortgage payments for qualified consumers, exiting the Government Sponsored Enterprises (GSEs) from conservatorship, and preserving cost-effective servicing options that also include an element of financial education. Most importantly, we support equal access for all — including appraisals without bias — to ensure the quality, objectivity, and reliability of the lending process for everyone involved. This is critical to ensuring homeownership is accessible regardless of race, ethnicity, gender, or color.

Not Covered (Miscellaneous)
We can circle back with an answer to provide accurate information on any subject that is not covered here. Jeremy Empol from our trade association — the California Credit Union League or the Nevada Credit Union League — will be in touch in the days ahead.

NV CONGRESSIONAL OFFICES

Sen. Catherine Cortez Masto (Democrat)
Committees: Finance; Banking, Housing, and Urban Affairs; Energy and Natural Resources; Indian Affairs
Contact: Carol Wayman — carol_wayman@cortezmasto.senate.gov (Senior Policy Adviser)
Office: 313 Hart (Senate)

Sen. Jacky Rosen (Democrat)
Committees: Aging; Armed Services; Commerce, Science, and Transportation; Health, Education, Labor, and Pensions; Homeland Security and Governmental Affairs; Small Business and Entrepreneurship
Contact: Kayla Primes — kayla_primes@rosen.senate.gov (Legislative Assistant)
Office: 713 Hart (Senate)

NV-1
Rep. Dina Titus (Democrat)
Committees: Foreign Affairs; Homeland Security; Transportation and Infrastructure
Contact: Joel Cohen — joel.cohen@mail.house.gov (Legislative Assistant)
Office: 2464 Rayburn (House)

NV-2
Rep. Mark Amodei (Republican)
Committees: Appropriations
Contact: Harper Stephens — harper.stephens@mail.house.gov (Senior Policy Adviser)
Office: 104 Cannon (House)

NV-3
Rep. Susie Lee (Democrat)
Committees: Appropriations
Contact: Lauren Toy — lauren.toy@mail.house.gov (Legislative Director)
Office: 365 Cannon (House)

NV-4
Rep. Steven Horsford (Democrat)
Committees: Armed Services; Budget; Ways and Means
Contact: LaVontae Brooks — lavontae.brooks@mail.house.gov (Deputy Chief of Staff)
Office: 562 Cannon (House)

CA CONGRESSIONAL OFFICES

Sen. Dianne Feinstein (Democrat)
Committees: Appropriations; Intelligence; Judiciary; Rules and Administration (and Joint Congressional-Executive Commission on China)
Contact: Justin Schardin — justin_schardin@feinstein.senate.gov (Legislative Assistant and Economic Policy Adviser)
Office: 331 Hart (Senate)

Sen. Alex Padilla (Democrat)
Committees: Budget; Environment and Public Works; Homeland Security and Governmental Affairs; Judiciary; Printing; Rules and Administration
Contact: Zac Commins — zac_commins@padilla.senate.gov (Legislative Assistant and Economic Policy Adviser)
Office: 112 Hart (Senate)

CA-1
Rep. Doug LaMalfa (Republican)
Committees: Agriculture; Transportation and Infrastructure
Contact: John Veale — john.veale@mail.house.gov (Legislative Director)
Office: 408 Cannon (House)

CA-2
Rep. Jared Huffman (Democrat)
Committees: Climate Crisis; Natural Resources; Transportation and Infrastructure
Contact: Anthony Montoya — anthony.montoya@mail.house.gov (Legislative Assistant)
Office: 1527 Longworth (House)

CA-3
Rep. John Garamendi (Democrat)
Committees: Armed Services; Transportation and Infrastructure
Contact: Bradley Bottoms — bradley.bottoms@mail.house.gov (Chief of Staff)
Office: 2368 Rayburn (House)

CA-4
Rep. Tom McClintock (Republican)
Committees: Budget; Judiciary; Natural Resources
Contact: Kelsey Gaudette — kelsey.gaudette@mail.house.gov (Legislative Correspondent)
Office: 2312 Rayburn (House)

CA-5
Rep. Mike Thompson (Democrat)
Committees: Taxation; Ways and Means
Contact: Crozer Connor — crozer.connor@mail.house.gov (Senior Legislative Assistant)
Office: 268 Cannon (House)

CA-6
Rep. Doris Matsui (Democrat)
Committees: Energy and Commerce
Contact: Christina McCauley — christina.mccauley@mail.house.gov (Legislative Director)
Office: 2311 Rayburn (House)

CA-7
Rep. Ami Bera (Democrat)
Committees: Foreign Affairs; Science, Space, and Technology
Contact: Emma Bruce — emma.bruce@mail.house.gov (Legislative Assistant)
Office: 172 Cannon (House)

CA-8
Rep. Jay Obernolte (Republican)
Committees: Budget; Natural Resources; Science, Space, and Technology
Contact: Collin Sabine — collin.sabine@mail.house.gov (Legislative Assistant)
Office: 1029 Longworth (House)

CA-9
Rep. Jerry McNerney (Democrat)
Committees: Energy and Commerce; Science, Space, and Technology
Contact: Lauren Hernandez — lauren.hernandez@mail.house.gov (Legislative Director)
Office: 2265 Rayburn (House)

CA-10
Rep. Josh Harder (Democrat)
Committees: Agriculture; Appropriations
Contact: Kara Verma — kara.verma@mail.house.gov (Legislative Assistant)
Office: 209 Cannon (House)

CA-11
Rep. Mark DeSauliner (Democrat)
Committees: Education and Labor; Oversight and Reform; Rules; Transportation and Infrastructure
Contact: Carl Roberts — carl.roberts@mail.house.gov (Senior Legislative Assistant)
Office: 503 Cannon (House)

CA-12
House Speaker Nancy Pelosi (Democrat)

CA-13
Rep. Barbara Lee (Democrat)
Committees: (N/A)
Contact: Joyce Kazadi — joyce.kazadi@mail.house.gov (Chief of Staff)
Office: (N/A)

CA-14
Rep. Jackie Speier (Democrat)
Committees: Armed Services; Intelligence; Oversight and Reform
Contact: Felix Wu — felix.wu@mail.house.gov (Legislative Assistant)
Office: 2465 Rayburn (House)

CA-15
Rep. Eric Swalwell (Democrat)
Committees: Intelligence; Judiciary; Homeland Security
Contact: Sarah Shapiro — sarah.shapiro@mail.house.gov (Legislative Director)
Office: 174 Cannon (House)

CA-16
Rep. Jim Costa (Democrat)
Committees: Agriculture; Foreign Affairs; Natural Resources
Contact: Kit Devine — kit.devine@mail.house.gov (Legislative Aide)
Office: 2081 Rayburn (House)

CA-17
Rep. Ro Khanna (Democrat)
Committees: Agriculture; Armed Services; Oversight and Reform
Contact: Kate Gould — kate.gould@mail.house.gov (Chief of Staff/National Security and Human Rights Adviser)
Office: 306 Cannon (House)

CA-18
Rep. Anna Eshoo (Democrat)
Committees: Energy and Commerce
Contact: Eric Henshall — eric.henshall@mail.house.gov (Legislative Director)
Office: 272 Cannon (House)

CA-19
Rep. Zoe Lofgren (Democrat)
Committees: House Administration; Judiciary; Library of Congress; Modernization of Congress; Printing; Science, Space, and Technology
Contact: Ryan Clough — ryan.clough@mail.house.gov (Senior Counsel)
Office: 1401 Longworth (House)

CA-20
Rep. Jimmy Panetta (Democrat)
Committees: Armed Services; Agriculture; Ways and Means
Contact: Mark Dennin — mark.dennin@mail.house.gov (Legislative Director)
Office: 406 Cannon (House)

CA-21
Rep. David Valadao (Republican)
Committees: Appropriations
Contact: Jacob Dunklin — jacob.dunklin@mail.house.gov (Legislative Assistant)
Office: 1728 Longworth (House)

CA-22
Rep. Connie Conway (Republican)

CA-23
House Minority Leader Kevin McCarthy (Republican)
Committees: (N/A)
Contact: Brittan Specht — brittan.specht@mail.house.gov (Legislative Assistant)
Office: 2468 Rayburn (House)

CA-24
Rep. Salud Carbajal (Democrat)
Committees: Agriculture; Armed Services; Transportation and Infrastructure
Contact: Tanner Dorrough — tanner.dorrough@mail.house.gov (Legislative Assistant)
Office: 2331 Rayburn (House)

CA-25
Rep. Mike Garcia (Republican)
Committees: Appropriations; Science, Space, and Technology
Contact: Jacob Gattman — jacob.gattman@mail.house.gov (Legislative Director)
Office: 1535 Longworth (House)

CA-26
Rep. Julia Brownley (Democrat)
Committees: Climate Crisis; Natural Resources; Transportation and Infrastructure; Veterans’ Affairs
Contact: Nate Birnbaum — nathaniel.birnbaum@mail.house.gov (Legislative Assistant)
Office: 2262 Rayburn (House)

CA-27
Rep. Judy Chu (Democrat)
Committees: Budget; Small Business; Ways and Means
Contact: David Silberberg — david.silberberg@mail.house.gov (Legislative Assistant)
Office: 2423 Rayburn (House)

CA-28
Rep. Adam Schiff (Democrat)
Committees: Intelligence
Contact: Jamie Thompson — jamie.thompson@mail.house.gov (Legislative Aide)
Office: 2309 Rayburn (House)

CA-29
Rep. Tony Cardenas (Democrat)
Committees: Energy and Commerce
Contact: Patricia Zaragoza — patricia.zaragoza@mail.house.gov (Legislative Assistant)
Office: 2438 Rayburn (House)

CA-30
Rep. Brad Sherman (Democrat)
Committees: Foreign Affairs; Financial Services; Science, Space, and Technology
Contact: Rob Robilliard — robert.robilliard@mail.house.gov (Legislative Assistant)
Office: 2129 Rayburn (House)

CA-31
Rep. Pete Aguilar (Democrat)
Committees: Appropriations; House Administration
Contact: Elise Sugarman — elise.sugarman@mail.house.gov (Senior Legislative Assistant)
Office: 109 Cannon (House)

CA-32
Rep. Grace Napolitano (Democrat)
Committees: Natural Resources; Transportation and Infrastructure
Contact: Joe Sheehy — joe.sheehy@mail.house.gov (Chief of Staff)
Office: 1610 Longworth (House)

CA-33
Rep. Ted Lieu (Democrat)
Committees: Foreign Affairs; Judiciary
Contact: LaTreshia Hamilton — latreshia.hamilton@mail.house.gov (Legislative Counsel)
Office: 403 Cannon (House)

CA-34
Rep. Jimmy Gomez (Democrat)
Committees: Oversight and Reform; Ways and Means
Contact: Emily Mercado — emily.mercado@mail.house.gov (Senior Legislative Assistant)
Office: 1530 Longworth (House)

CA-35
Rep. Norma Torres (Democrat)
Committees: Appropriations; Rules
Contact: Serena Gobbi — serena.gobbi@mail.house.gov (Legislative Director)
Office: 2227 Rayburn (House)

CA-36
Rep. Raul Ruiz (Democrat)
Committees: Energy and Commerce; Veterans’ Affairs
Contact: Andrew Geibel — andrew.geibel@mail.house.gov (Legislative Assistant)
Office: 2342 Rayburn (House)

CA-37
Rep. Karen Bass (Democrat)
Committees: (N/A)
Contact: (N/A)
Office: (N/A)

CA-38
Rep. Linda Sanchez (Democrat)
Committees: Ways and Means
Contact: Cody Willming — cody.willming@mail.house.gov (Legislative Director)
Office: 2329 Rayburn (House)

CA-39
Rep. Young Kim (Republican)

Committees: Foreign Affairs; Small Business; Science, Space, and Technology
Contact: Alex Cisneros — alex.cisneros@mail.house.gov (Legislative Director)
Office: 1306 Longworth (House)

CA-40
Rep. Lucille Roybal-Allard (Democrat)
Committees: Appropriations
Contact: Carlos Condarco — carlos.condarco@mail.house.gov (Legislative Director)
Office: 2083 Rayburn (House)

CA-41
Rep. Mark Takano (Democrat)
Committees: Education and Labor; Veterans Affairs
Contact: Matthew Ceja — matthew.ceja@mail.house.gov (Legislative Assistant)
Office: 420 Cannon (House)

CA-42
Rep. Ken Calvert (Republican)
Committees: Appropriations
Contact: Chandler Smith — chandler.m.smith@mail.house.gov (Legislative Assistant)
Office: 2205 Rayburn (House)

CA-43
Rep. Maxine Waters (Democrat)
Committees: (N/A)
Contact: Glen Sears — glen.sears@mail.house.gov (Committee Director)
Office: 2221 Rayburn (House)

CA-44
Rep. Nanette Barragan (Democrat)
Committees: Energy and Commerce; Homeland Security
Contact: Tony Tran — tony.tran@mail.house.gov (Legislative Assistant)
Office: 2246 Rayburn (House)

CA-45
Rep. Katie Porter (Democrat)
Committees: Natural Resources; Oversight and Reform
Contact: Joonsoo Yi — joonsoo.yi@mail.house.gov (Field Representative/Legislative Aide)
Office: (N/A)

CA-46
Rep. Lou Correa (Democrat)
Committees: Agriculture; Homeland Security; Judiciary
Contact: Ngoc Nguyen — ngoc.nguyen@mail.house.gov (Legislative Director)
Office: 2301 Rayburn (House)

CA-47
Rep. Alan Lowenthal (Democrat)
Committees: Natural Resources; Transportation and Infrastructure
Contact: Chris Gorud — chris.gorud@mail.house.gov (Chief of Staff)
Office: 108 Cannon (House)

CA-48
Rep. Michelle Steel (Republican)
Committees: Education and Labor; Transportation and Infrastructure
Contact: Jonathan Kupperman — jonathan.kupperman@mail.house.gov (Senior Legislative Assistant)
Office: 1113 Longworth (House)

CA-49
Rep. Mike Levin (Democrat)
Committees: Climate Crisis; Natural Resources; Veterans Affairs
Contact: Alison Feinswog — alison.feinswog@mail.house.gov (Legislative Assistant)
Office: 1030 Longworth (House)

CA-50
Rep. Darrell Issa (Republican)
Committees: Foreign Affairs; Judiciary
Contact: Jeff Solsby — jeff.solsby@mail.house.gov (Senior Policy Adviser)
Office: 2300 Rayburn (House)

CA-51
Rep. Juan Vargas (Democrat)
Committees: Financial Services; Foreign Affairs
Contact: Kyle Bligen — kyle.bligen@mail.house.gov (Legislative Assistant)
Office: 2244 Rayburn (House)

CA-52
Rep. Scott Peters (Democrat)
Committees: Budget; Energy and Commerce; Small Business; Joint Economic Committee
Contact: Baillee Brown — baillee.brown@mail.house.gov (Legislative Director)
Office: 1201 Longworth (House)

CA-53
Rep. Sara Jacobs (Democrat)
Committees: Armed Services; Foreign Affairs; Economic Disparity and Fairness in Growth
Contact: Arion Laws — arion.laws@mail.house.gov (Legislative Aide)
Office: 1232 Longworth (House)

REGULATORY ISSUES

Regulator Visits, Background, & More
Outlined below are the top regulatory issues for the National Credit Union Administration (NCUA) and the Consumer Financial Protection Bureau (CFPB) for this year’s Hike The Hill.

While talking points are provided for each regulatory issue, the best communication method is for you to tell your credit union’s story. Be prepared to share with regulators how each of these issues have affected or will affect your credit union, your members, and your community.

Regulatory Burden
Regulatory burden continues to be a significant issue for credit unions. Credit unions must comply with a number of new and revised requirements from not only the NCUA and the CFPB, but also from the Federal Reserve Board (FRB), the Financial Accounting Standards Board (FASB), and others. Tailored and focused regulations are especially necessary given the operational pressures caused by the COVID-19 crisis and its economic fallout.

Credit unions are the best hope for consumers and small businesses that need affordable and fair financial services, since their customers are also their owners. This key incentive — that credit union customers are in reality member-owners — is lacking in the for-profit banking industry.

Our Message to the NCUA:

  • We urge the NCUA Board to proceed with outstanding and future rulemakings aimed at aiding credit unions and their members during the COVID-19 pandemic and beyond.
  • We appreciate the NCUA’s advocacy on behalf of credit unions. We urge the NCUA to continue requesting that the CFPB transfer credit unions with over $10 billion in assets to the NCUA for examination and enforcement of consumer financial protection laws.

Our Message to the CFPB:

  • Rather than drafting rules with a one-size-fits-all approach, the CFPB should draft them narrowly to address those engaged in abusive behavior.
  • The CFPB should consider the unique model of credit unions and recognize that credit unions are not-for-profit cooperatives owned by the consumers they serve. This distinction should be acknowledged in rulemakings implemented to address the irresponsible practices of bad actors in the industry.
  • We urge the CFPB to consult with the NCUA prior to issuing proposed and final rules to determine how a future rulemaking might impact the safety and soundness of credit unions, how the regulatory costs might impact small credit unions, and how our prudential regulator may already be addressing the same issue.

NCUA Topics

Net Worth and Prompt Corrective Action (PCA) Relief
In response to the COVID-19 pandemic and resulting economic disruption, the National Credit Union Administration (NCUA) issued an interim final rule that: 1) temporarily waives the earnings retention requirement for all federally insured credit unions classified as “adequately capitalized”; and 2) permits credit unions to submit simplified net-worth restoration plans if the reduction in capital was caused by share growth resulting from a temporary condition due to the pandemic. The relief provided by the current interim final rule is temporary, expiring March 31, 2023.

Our Message to the NCUA:

  • Credit unions are increasingly investing member deposits (which have swelled as a result of pandemic policies) in zero- and low-risk assets, such as shorter-term U.S. Treasury securities. These deposits and resulting investments, however, have caused a decrease in the net-worth ratio for many credit unions. We believe the NCUA should exclude such investments from the net worth ratio calculation, which can be achieved by amending the definition of “total assets” to exclude them.
  • We urge the NCUA to actively engage Congress to pursue changes to section 1790d of the Federal Credit Union Act to provide the NCUA Board with additional tools to aid otherwise healthy credit unions that encounter crisis-induced Prompt Corrective Action (PCA) challenges.

Cybersecurity and Data
Cyber and data security is one of the biggest issues currently facing most industries, including financial services. Cybersecurity also remains a key supervisory focus for NCUA, and the agency encourages credit unions to use its Automated Cybersecurity Evaluation Toolbox (ACET) to bolster their security and risk-management processes. 

Our Message to the NCUA:

  • We appreciate the NCUA’s recognition of this issue and the agency’s commitment to make it a focus area; however, we believe the NCUA should do so while ensuring credit unions and members benefit from the examinations.
  • How can the NCUA work with credit unions to ensure cybersecurity examinations and other cybersecurity requirements are not increasingly taxing on a credit union’s resources?
  • Use of ACET is optional for credit unions. What are the ramifications if a credit union chooses to use their own assessment tool and process?

Succession Planning
In January 2022, the NCUA issued a proposed rule that would require boards of directors at federal credit unions establish and adhere to processes for succession planning. This will help ensure credit unions have plans to fill key positions to provide continuity of operations, such as officers of the board, management officials, executive committee members, supervisory committee members, and (where provided for in the bylaws) members of the credit committee. In addition, the proposed rule would require directors to be knowledgeable about the federal credit union’s succession plan.

Our Message to the NCUA:

  • We believe the NCUA should address the issue of succession planning through guidance rather than regulation.

Digital Assets and Related Technologies
In July 2021, the NCUA Board published a request for information (RFI) that solicited information regarding a wide range of issues pertaining to decentralized finance and digital assets as they relate to the credit union industry. Subsequently, the NCUA issued Letters to Credit Unions (December 2021 and May 2022) where the agency states that credit unions can enter into third-party relationships with crypto/digital currency-related vendors, and that credit unions may use distributed ledger technologies for business uses to enhance operations and ongoing competitiveness to include custodial powers for cryptocurrency.

Our Message to the NCUA:

  • The NCUA should work to ensure credit unions have the proper guidance to provide digital currency-related services to members by building off its December 2021 and May 2022 Letters to Credit Unions.
  • Is the NCUA participating in any interagency working groups on digital assets to ensure the interests of credit unions are strongly represented?

CFPB Topics

Consumer Financial Products or Service Fees (Overdrafts)
The Consumer Financial Protection Bureau (CFPB) issued a request for information (RFI) on fees in January 2022. The RFI is extremely broad, encompassing all fees in consumer financial services and not just overdrafts/non-sufficient funds (NSFs). The RFI characterizes a broad range of common fees in consumer financial services as so-called “junk fees” that obscure the true cost of financial services and result from a non-competitive marketplace.

Our Message to the CFPB:

  • Credit unions offer services that benefit their members and provide the exact type of relationship banking the CFPB Director has stated he wanted to return to. Credit unions are the original consumer financial protectors.
  • The CFPB is not vested with the authority to police competitiveness in the financial services market, as the RFI implies, nor can it establish usury limits or cap fees. We caution the CFPB against regulatory overreach.
  • Tell your credit union’s story on how you assist members who have experienced overdrafts, including: the financial education you provide at account opening and when overdrafts occur; the path you have for new members to obtain a checking account when they have a ChexSystems record or other negative account history; and the types of products you offer that allow members to have a starter account with no overdraft capability. 

Regulation by Enforcement
Under prior CFPB directors, the bureau engaged in the practice of “regulation by enforcement,” especially regarding the standard for “abusive.” The bureau’s “I know it when I see it” approach often resulted in uncertainty in the financial services marketplace and presented due process concerns.

Our Message to the CFPB:

  • We support the CFPB taking meaningful steps toward establishing clear standards for, and transparency in, all aspects of its authority.
  • We believe that if the CFPB wants to make actionable policy, it should either propose regulations through the notice-and-comment process or issue policy statements clarifying expectations for regulated entities.

Ability-to-Repay (ATR)/Qualified Mortgage (QM) Rule
In 2020 and early 2021 rulemakings, the CFPB extended the expiration of the Temporary GSE QM “patch” and finalized a new and more flexible General QM definition. In addition, it proposed a new Seasoned QM category in recognition that longer-tenured mortgages with no or minimal defaults are, by definition, sustainable and free of ATR issues. The CFPB allowed the new General QM definition to become effective but delayed the mandatory compliance deadline for its use until Oct. 1, 2022, simultaneously signaling an intention to review and revise the rule.

In July of 2022, the CFPB indicated in a blog post that it intended to review the rule to assess the Seasoned QM category and explore ways to spur streamlined modification and refinancing.

Our Message to the CFPB:

  • We strongly urge the CFPB to engage stakeholders in discussions on potential policy changes so it can understand potential consequences before it acts.
  • We urge the CFPB to consider the unnecessary expenditures of credit union funds and staff time related to the frequency of the QM rule changes on smaller financial institutions.
  • We recommend the CFPB allow the Seasoned QM and new General QM definitions to stand as finalized, and for the mandatory compliance deadline to pass on Oct. 1, 2022. We also recommend the CFPB issue a statement to that effect to provide clarity and certainty for lenders. The CFPB can then study the effectiveness of both QM definitions and amend the definitions based on its findings.

Small Business Loan Rulemaking
In September 2021, the CFPB issued its long-anticipated proposal to require lenders to compile, maintain, and submit data on credit applications by women-owned, minority-owned, and small businesses. The rulemaking is required by Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which amends the Equal Credit Opportunity Act (ECOA).

The CFPB’s 900-page proposal is complex and includes several provisions that could have an adverse impact on the availability of credit for small business borrowers. In general, the rule applies to any entity originating at least 25 covered credit transactions to small businesses in the prior two calendar years, with no exemption based on asset size or other factors.

Our Message to the CFPB:

  • The proposal’s low threshold for reporting could create unintended consequences due to increased operational costs. These conditions could result in fewer market participants, especially among smaller lenders, and reduced access to credit for the nation’s small businesses.
  • Credit unions are legally bound to serve specific fields of membership and must comply with statutory member business lending (MBL) restrictions. As a result, credit union data collected pursuant to any 1071 rule would likely be incomparable with data from other lenders that may legally serve any consumer. We believe the CFPB should account for this difference, both in the rule’s development and when considering the data it has collected post-implementation.
  • We support tailoring this rule to reduce its impact on smaller participants in the commercial loan market, and to avoid creating heightened barriers to credit for small business borrowers.

Home Mortgage Disclosure Act (HMDA)
The CFPB has repeatedly acknowledged that credit unions maintained sound credit practices through the 2007 – 2009 economic/financial crisis and did not engage in the practices leading up to the crash of the housing market. Nevertheless, in 2015 the CFPB chose to adopt an HMDA final rule that disproportionately burdened credit unions with finite resources despite no evidence of past wrongful conduct.

Our Message to the CFPB:

  • While both the CFPB and Congress recently provided meaningful HMDA relief for smaller lenders, we recommend the CFPB adopt additional accommodations such as:
  • Allow reporting for home equity lines of credit (HELOCs) to once again be voluntary; and reduce the HMDA data set for all reporters to the data points required by statute.
  • Reconsider the privacy balancing test used to determine which HMDA data points are made available to the public in favor of consumer privacy.

Rumored Expansion of EFTA and Regulation E
There have been multiple press reports indicating the CFPB plans to expand the scope of Electronic Fund Transfer Act (EFTA) and Regulation E to impose liability on financial institutions, including credit unions, when fraudulent actions are initiated on digital payment platforms by a member themselves. Specifically, these reports indicate that the CFPB is considering a rewrite of the statute, under which credit unions would be liable for the actions of illegal actors if a consumer/member initiates a money transfer.

Our Message to the CFPB:

  • The CFPB cannot impose liability not considered by EFTA absent congressional revision, and it cannot rewrite Regulation E to impose liability on credit unions without going through the formal rulemaking process.
  • While we strongly support efforts to stop fraudulent schemes, robust compliance programs to limit this activity, and all efforts at the federal level to mandate safe and reliable payment platforms, this potential action could be unduly risky for credit unions to offer money transfer services, thereby reducing consumer access to such services.