Legislative & Regulatory Update

Last call for the CUPAC/CULAC Holiday Sweepstakes, anticipating engagement with North Dakota GAC members, impact of congressional actions on Section 1071 Rule, and more. 

Last Call for the CUPAC/CULAC Holiday Sweepstakes: Win Big, Dream Bigger!

Hey folks, got a minute? I've got some news that's hotter than your morning coffee. The CUPAC/CULAC Holiday Sweepstakes is in its final stretch, and let me tell you, it's now or never! With the closing bell set for 5:00 p.m. (CT) tomorrow December 8, 2023, it's time to make your move.

Here's the scoop: Your chances of winning in this sweepstakes? Way higher than striking it lucky in the lottery. I'm not kidding! Imagine missing out on the chance to pocket an extra grand today. That's a lot of dough on the line, folks.

And it's not just about the cash. Think about the joy on your kid's face when you finally snag that PS5 or – hold your horses – even a pony! Yes, that's right. That pony your daughter has been dreaming about could be one lucky draw away. But remember, you've got to be in it to win it. The drawing is happening on Monday, December 11, at 3:00 p.m. (CT), so mark your calendars.

Questions? Curiosities? Just want to chat about your odds? Reach out to me or Chesney Garnos. We're here to help and maybe share a laugh or two.

So, what are you waiting for? Grab your chance at the sweepstakes glory before it's too late. Remember, dreams don't work unless you do.

Anticipating Engagement and Collaboration with North Dakota GAC Members
As the North Dakota Government Affairs Committee (GAC) intensifies its advocacy efforts, members of the Dakota Credit Union Association should anticipate increased communication and collaboration opportunities. The recent emphasis on the roles of the Legislative & Regulatory Advocacy and Fund-Raising Subcommittees signals a renewed commitment to broadening and deepening the engagement within the credit union community. This approach, focusing on collective action and shared goals, is crucial for amplifying the voice and impact of credit unions in both legislative and regulatory spheres.

Members can expect to be called upon to participate in various initiatives and discussions led by the GAC. These may range from providing input on legislative matters to contributing ideas for effective fundraising strategies. The goal is to harness the diverse expertise and perspectives within the credit union community to formulate robust, well-rounded advocacy strategies. Such collaboration is not only beneficial for individual credit unions but also strengthens the collective influence of the sector in shaping policies and regulations.

Additionally, there may be opportunities for direct engagement with the subcommittees, either through formal committee roles or through participating in targeted projects and campaigns. The GAC's focus on increasing participation, especially among credit unions with varying levels of prior involvement, underscores the importance of inclusive and comprehensive engagement strategies.

For members who are keen to contribute, this period presents an excellent opportunity to influence the direction and efficacy of credit union advocacy in North Dakota. Active participation in GAC initiatives and openness to communication and collaboration will be key to enhancing the advocacy efforts and ensuring that the interests of the credit union community are effectively represented and advanced.

Impact of Congressional Actions on Section 1071 Rule: A Close Look at Credit Unions’ Perspectives
In a pivotal move, the U.S. Congress, through both the Senate and the House, has taken decisive steps against the Consumer Financial Protection Bureau’s (CFPB) Section 1071 Rule. This rule, integral to the Dodd-Frank Act, mandates credit unions and banks to gather demographic data on small business loan applications, including those from minority-owned, women-owned, and LGBTQI+-owned businesses. The Senate passed the resolution disapproving this rule on October 18, 2023, by a bipartisan vote of 53-44. Following suit, the House voted 221-202 in favor of the Senate’s joint resolution on December 1, 2023.

Credit Unions’ Stance and Concerns
Credit unions represented by their leading organizations, the Credit Union National Association (CUNA) and the National Association of Federally-Insured Credit Unions (NAFCU), have voiced strong opposition to the CFPB’s rule. CUNA President/CEO Jim Nussle and NAFCU President/CEO Dan Berger emphasized that the complexity and significant costs of the Section 1071 rule would disproportionately burden credit unions, potentially leading to fewer and less favorable outcomes for all small business borrowers. They argue that the rule’s broad scope will substantially raise the cost of small business borrowing and requires data collection on businesses that do not fit the traditional definition of ‘small businesses.’

Legal Challenges and Nationwide Injunction
This rule has also faced legal challenges, leading to significant court rulings. On October 26, 2023, the U.S. District Court for the Southern District of Texas issued a nationwide injunction, prohibiting the CFPB from implementing or enforcing its Small Business Lending Rule as part of Section 1071. This ruling followed an initial narrower injunction that only applied to specific plaintiffs, including the Texas Bankers Association and its members, the American Bankers Association and its members, and Rio Bank. The court’s decision was influenced by the argument that the CFPB’s funding structure violates the U.S. Constitution’s Appropriations Clause, posing a threat of irreparable harm to the intervenors, who would not be able to recover the compliance costs incurred.

Pending Supreme Court Decision
The nationwide injunction's future hinges on a pending Supreme Court case, CFPB v. Community Financial Services Association of America, which will decide on the constitutionality of the CFPB’s funding structure. The Supreme Court’s decision, expected by the end of its term in June 2024, will determine whether the injunction remains in effect or dissolves.

Credit Unions in the Spotlight: Navigating Fiscal Responsibility and Emerging Challenges
A Tug of War Over Budget Increases
The proposed 2024-2025 budget for the National Credit Union Administration (NCUA) has stirred up a hornet's nest in the credit union world. The budget, marking a 9.5% to 11% increase from the previous year, has led to widespread concerns. Organizations like the Ohio Credit Union League and the Illinois Credit Union League are particularly vocal, worrying that the financial burden of this hike could be unsustainable. They point out the current economic challenges and the shrinking number of credit unions as key reasons to reconsider these increases.

Staffing Strategy Under Scrutiny
The NCUA's proposal to add 28 new positions has been met with skepticism. Many believe this expansion lacks a clear rationale and argue for a more focused approach on training current staff. The aim is to optimize existing resources rather than adding to the payroll, with an eye on maintaining operational efficiency in a changing landscape.

Consumer Protection: Necessity or Overreach?
A significant debate is centered around the NCUA's heightened focus on consumer protection. While some argue that credit unions, due to their member-centric nature, inherently prioritize consumer interests, others are wary of potential regulatory duplication, especially with entities like the CFPB. The question raised is whether this increased oversight might be overkill, adding unnecessary costs and complexities.

Climate Change: A Point of Contention
While not the primary focus of the NCUA's budget, the issue of climate-related financial risks (CRFR) does feature in the discussions. Some organizations, like AFR+5, support the inclusion of CRFR in the NCUA’s budgeting, highlighting the significant financial risks posed by climate change and its impact on communities and credit union members. However, others, like CUNA, argue against regulatory action in this area without Congressional direction, focusing more on the immediate operational and financial challenges facing credit unions.

In Support of Transparency and Diversity
Amid these debates, there's a unanimous appreciation for the NCUA's transparent budget planning. Furthermore, the commitment to supporting small credit unions and Minority Depository Institutions (MDIs) garners widespread support, underscoring the vital role these institutions play in serving diverse and often under-resourced communities.

A Call for Balanced Decision-Making
The varied feedback from different credit union leagues and associations highlights a collective call for fiscal prudence, efficiency, and a regulatory approach that's sensitive to the diverse needs of the credit union sector. While there's agreement on issues like budget increases and staffing, views diverge on topics like climate change and regulatory overreach. This diversity of opinion underscores the challenge for the NCUA in striking a balance in its budgeting and policy decisions, ensuring they align with the multifaceted needs of the credit union community.

The NCUA's budget proposal for 2024-2025 has brought to the forefront key issues facing credit unions today. As the agency deliberates on its final budget, the balancing act between fiscal responsibility, operational efficiency, and responsiveness to emerging risks and member needs remains a pivotal task.

Contact John Alexander with any legislative or regulatory concerns at [email protected]. ​

---