Legislative & Regulatory Update

​Response to misleading CNN report on credit union lending. Plus, final CDFI Certification Application; a major CFPB enforcement action, and much more. 

by John Alexander, Director of Legislative & Regulatory Affairs

Before we break for the holidays, a few items of interest you will want to keep in mind as we head into the new year!

CNN’s Misleading Report on Credit Union Mortgage Lending Data
Following a misleading report by CNN on credit unions’ lending practices to minority and underserved communities, CUNA, NAFCU, and the African American Credit Union Coalition (AACUC), released a statement. In part, the response reads, “Credit unions recognize that owning a home is at the heart of many families’ financial dreams. As an industry, we have intentionally worked to address the challenges and inequities that working Americans, including minority and underserved communities, have in achieving this goal. It’s unfortunate that a recent CNN analysis misconstrued credit union mortgage lending data to paint an inaccurate picture and draw false conclusions about Navy Federal Credit Union, and the entire credit union industry.” You can read the entire statement here. More on this to come as we gather state-specific information and statistics to further rebut the misleading report.

Revised CDFI Certification Application: What You Need to Know
The Community Development Financial Institutions (CDFI) Fund recently unveiled its final revised CDFI Certification Application. This update is crucial for credit unions looking to maintain or acquire CDFI certification, which can open doors to funding opportunities and partnerships aimed at serving low-income and underserved communities. Credit unions should review these changes thoroughly to ensure compliance and continued eligibility for CDFI benefits. Updates/Pending Requests for Comment. CDFI Fund Releases Final Revised CDFI Certification Application.

Fair Hiring in Banking: Deadline for Comments Approaching
The National Credit Union Administration (NCUA) has put forward a proposal focusing on fair hiring practices within the banking sector. As the deadline for comments draws near, Dakota's credit unions have an opportunity to voice their opinions. This initiative emphasizes the importance of equitable hiring practices, potentially impacting recruitment and HR policies across the industry. Fair Hiring in Banking – Comments due January 8.

Simplification of Share Insurance Rules: Last Chance to Comment
The NCUA's proposal for simplifying share insurance rules is nearing its comment deadline in a few days. This proposal aims to streamline the complexities surrounding share insurance, potentially making it easier for credit unions to navigate and manage their insurance requirements. It's a chance for credit unions to contribute to a more efficient and understandable system. Simplification of Share Insurance Rules – Comments due December 26.

Overhead Transfer Rate Methodology: Feedback Opportunity
Credit unions have a 60-day window, post-publication in the Federal Register, to comment on the NCUA's proposed changes to the Overhead Transfer Rate (OTR) methodology. This methodology determines how the NCUA allocates its operating costs between the Share Insurance Fund and operating fees paid by credit unions. The NCUA Board has greenlit a series of significant decisions, including the approval of its 2024-2025 budget and revisions to the operating fee schedule methodology. These changes, marking a proactive step towards modernizing and strengthening the credit union sector, are set to shape the landscape for the next two years, and could be significant, affecting how credit unions budget and plan for regulatory costs. Overhead Transfer Rate Methodology.

NCUA Budget Increase and Staffing Expansion
The NCUA's new budget, showing a seven percent increase over the current year, is a clear indication of the agency's commitment to enhancing its capabilities and services. Notably, the budget encompasses the addition of 27 new positions within the NCUA. This expansion includes four additional examiner roles than initially proposed, reflecting the NCUA’s focus on robust oversight and effective regulation of credit unions. CUNA participated in the NCUA's budget meeting and submitted detailed written comments last month, demonstrating the industry's keen involvement in regulatory matters.

Operating Fee Schedule Methodology Revamped
In a move welcomed by smaller credit unions, the NCUA Board also unanimously approved significant revisions to the Operating Fee Schedule methodology. The asset threshold below which federal credit unions are exempt from paying the operating fee has been doubled, moving from $1 million to $2 million. This change provides tangible relief to smaller institutions, aligning with the broader goal of supporting credit unions in serving their communities more effectively. Future adjustments to this exemption threshold will now be tied to the aggregate growth rate of federal credit union assets, ensuring a dynamic and responsive fee structure.

CFPB Enforcement Action Against U.S. Bank
In a major enforcement action, the CFPB has ordered U.S. Bank to cough up nearly $21 million. This hefty sum is a response to the bank's practices during the COVID-19 pandemic, which left tens of thousands of Americans in the lurch, unable to access crucial unemployment benefits.

The bank froze a vast number of accounts and didn't provide a straightforward or quick way for customers to regain access. It also failed to give provisional credits while probing potentially unauthorized transfers. The CFPB found that U.S. Bank had violated the Consumer Financial Protection Act and the Electronic Fund Transfer Act. The bank failed to provide consistent instructions for unfreezing accounts and did not issue provisional account credits as required by law.

As always, if you have legislative or regulatory questions or concerns, do not hesitate to contact me. Have a great holiday, and I will return with more regulatory and legislative news next year, on January 4th.