Legislative & Regulatory Update

Is a financial showdown brewing with the CFPBs overdraft fees proposal? Plus, as interchange debate heats up, be sure to contact your legislators. 

by John Alexander, Director of Legislative & Regulatory Affairs

Empowering Financial Futures
In the heart of the Dakota plains, a financial showdown is quietly brewing, set against the backdrop of the Consumer Financial Protection Bureau's (CFPB) latest proposal on overdraft fees. At the center of this unfolding drama is the Dakota Credit Union Association (DakCU), which has taken a stand not only to champion the cause of credit unions but to advocate for a financial landscape that remains fair and inclusive for all. With the clock ticking towards April 1st, DakCU is rallying Dakotans to share their stories, aiming to fortify their submission to the CFPB with the lived realities of those on the ground.

The CFPB's intent to amend Regulations E and Z, targeting overdraft fees by "very large" financial institutions, underscores a commendable endeavor to shield consumers from the burdens of excessive fees. This move is emblematic of a broader quest for a transparent financial ecosystem, a mission that DakCU wholeheartedly shares. Yet, beneath this alignment of goals lies a complex layer of concern for the unique position and contributions of credit unions, particularly those dotting the Dakota landscape.

Credit unions stand apart in the financial world; they are not-for-profit, member-centric organizations that prioritize financial health over profit margins. This ethos of mutual support and cooperation underpins their approach, making them indispensable allies for many, especially those in the most vulnerable corners of our communities. However, the sweeping changes proposed by the CFPB have raised alarm bells within DakCU, pointing to potential unintended consequences that could ripple through the fabric of financial inclusion and accessibility.

The concerns are manifold. There is the specter of negative impacts on financial inclusion, the disproportionate operational challenges for smaller credit unions, and the risk of curtailing essential financial services to marginalized populations. These are not hypotheticals but real challenges that credit unions face, challenges that could be exacerbated by the proposed regulatory changes.

Yet, amidst these concerns, there lies a beacon of hope in the form of financial literacy and empowerment initiatives led by credit unions. From rural emergency loan programs to financial literacy workshops for resettled refugees, credit unions have demonstrated time and again their commitment to serving their members' needs holistically. These efforts embody the spirit of innovation and inclusivity that credit unions bring to the financial ecosystem, illustrating how education and personalized advice can pave the way toward financial stability and independence for many.

In response to the proposed rule, DakCU proposes a balanced approach that recognizes the unique role of credit unions in promoting financial well-being. This includes seeking exemptions for credit unions from the rule, advocating for collaborative efforts to enhance financial literacy, and engaging in meaningful dialogue between the CFPB, credit unions, and stakeholders to craft better regulation. Such measures aim not only to preserve the essential services provided by credit unions but also to uphold the principles of fairness and transparency that are the hallmarks of a healthy financial ecosystem.

As DakCU prepares to submit its response to the CFPB, it does so with a clear message: the path to a fair and equitable financial landscape is through recognizing the invaluable contributions of credit unions and ensuring that regulatory measures do not inadvertently hinder their ability to serve their communities. With the support of Dakotans' real-life stories, DakCU stands ready to push for a narrative that truly reflects the needs and aspirations of those it serves.

Advice to Dakotans: Share your stories with DakCU to strengthen the advocacy for fair financial practices and ensure your voice is heard in shaping a financial landscape that works for everyone. Please email your stories to [email protected].  

A Vibrant Evening of Democracy in Action: Happy Hour Fundraiser at Laughing Sun Brewery
This week, I embarked on my first exploration of civic engagement in North Dakota, attending a Happy Hour Fundraiser at the Laughing Sun Brewery in Bismarck, ND. The gathering, aimed at bolstering the Democratic Party, evolved into a vibrant arena for open dialogue between the public and their elected representatives. Set against the brewery's relaxed atmosphere, state legislators and senators engaged in candid discussions with guests, providing an insightful peek into the mechanics of local governance through personal interactions.

Throughout the night, the air buzzed with discussions on a variety of pressing issues, from education and healthcare to sustainability and economic development. The opportunity to engage in meaningful conversations with numerous local leaders underlined the event's importance as a conduit for community voices, highlighting the democratic spirit at the core of Bismarck's identity.

It underscored the essential role of such events in bridging the gap between the public and those in power, serving as a vibrant forum for the exchange of ideas and the strengthening of communal bonds.

• Speak Up: Use opportunities to discuss your views and concerns; your input is crucial.
• Stay Engaged: Continuous engagement is key to fostering a healthy democracy and effecting change.

 
Dispelling Myths: The Real Challenges Facing Small Restaurants
In a revealing turn of events, a new explainer document released by the Electronic Payments Coalition (EPC) titled IT’S NOT YOUR CARD: Unpacking the Costs that Actually Crush Small Restaurants is challenging the narrative promoted by corporate mega-stores about the financial burdens facing small eateries. Contrary to the widespread belief that credit card interchange rates are to blame for the financial difficulties of small restaurant owners, the document presents compelling evidence to the contrary.

For years, the dialogue surrounding the struggles of small restaurants has frequently pointed fingers at credit card fees as a major culprit. However, the EPC's recent findings paint a different picture, showing that credit card interchange rates have remained stable for nearly a decade. This stability suggests that these fees are not the root cause of the financial hardships plaguing small businesses in the food industry.

Instead, the EPC's document directs attention to the real villains of the story: surging labor costs, skyrocketing prices of goods, and escalating rents. These factors have created a perfect storm for small restaurant owners, squeezing their profit margins and making it increasingly difficult to stay afloat in a competitive market.

The narrative shift is significant, as it not only challenges prevailing assumptions but also calls for a reevaluation of the support structures needed for small businesses. With the focus now on the true sources of financial strain, stakeholders can better advocate for policies and practices that genuinely address the needs of small restaurant owners.

The EPC's findings are a clarion call for policymakers, industry leaders, and the community at large to reassess how we support the backbone of the local economy—small businesses. As the document sheds light on the actual costs crushing small restaurants, it paves the way for more targeted and effective solutions that can help these vital community hubs thrive in the face of adversity.

Your Voice Against the Inclusion of the Credit Card Competition Act
Regarding the Credit Card Competition Act, your efforts and advocacy are crucial. We strongly urge you to contact lawmakers today and emphasize that this interchange bill must not be included or attached to any forthcoming funding bills or the National Defense Authorization Act (NDAA). It's critical that all credit unions mobilize both employees and members to address this interchange issue, ensuring our collective voice is unmistakably heard.
Act now to protect the interests of credit unions and their members.

Questions about ViClarity?
I hope you are all taking advantage of our newest benefit of membership, ViClarity. With their expertise in governance, risk, and compliance consulting solutions for credit unions, they provide compliance support for no additional costs! They can be relied on to help you with any compliance question, policy or disclosure review, or even prepare for an external or regulatory audit. As a DakCU member, you have access to exclusive resources from ViClarity including their compliance hotline, updates in The Memo, webinars, BSA training, and many other online resources. Click here to review some ViClarity FAQs and don’t hesitate to contact me if you have any questions about the platform.