IBJ: How much of an impact will the newly signed Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) have on credit unions?
Nussle: The law will create targeted regulatory relief for community financial institutions, allowing them to dedicate more resources to serving Main Street consumers.
Specific regulatory relief provisions in the bill would:
• Establish a safe harbor from certain requirements for a loan to be considered a Qualified Mortgage;
• Rescind the additional data points required under the Home Mortgage Disclosure Act for insured credit unions that originate fewer than 500 closed-end and/or 500 open-end lines of credit;
• Reclassify one-to-four unit, non-owner occupied residential loans as real estate loans, so the loan would not count against the member business lending cap;
• Clarify that that the same consumer protections in place with respect to mortgage lending are nonexistent for Property Assessed Clean Energy loans;
• Remove the three-day wait period required for the combined TRID mortgage disclosure if a creditor extends to a consumer a second offer of credit with a lower annual percentage rate;
• Require NCUA to make publicly available a draft of their proposed budget, hold a hearing with public notice during which this draft would be discussed and solicit and consider public comment about the draft budget;
• Provide a safe harbor for properly trained financial employees who report alleged elder financial abuse; and
• Require the U.S. Department of Treasury to conduct a study on the risks that cyber threats may pose to financial institutions.
IBJ: When do you expect to see some relief?
Nussle: Now that this historical legislation has been signed into law by President Trump, we hope to see positive effects begin to emerge in the operating environment in the coming months.
IBJ: Dodd-Frank was well-intentioned, but it became apparent after a while that the regulations would be onerous for smaller businesses. When did the impact on credit unions first become apparent?
Nussle: Congress enacted the Dodd-Frank Act (in 2010) to monitor the largest banks responsible for the financial crisis. Complying with new regulations created for the titans of the industry became costly for community financial institutions, who had little to do with the Great Recession.
Challenges that came about with the passage of Dodd-Frank have emerged over time; it didn’t happen all at once. The impact of these one size fits all regulations has taken their toll on credit unions.
IBJ: How much time did your group spend on this bill?
Nussle: Immediately following the last election cycle CUNA crafted a strategy for our Campaign for Common-Sense Regulation. We used it to work together with league partners, chief bipartisan sponsors in the Senate, and House Financial Services Committee Chairman (Jeb) Hensarling.
IBJ: Did any credit unions close as the result of the law? Was growth substantially slowed?
Nussle: Regulations are eating up one of every six dollars credit unions spend on operations each year – or $6.1 billion in total. Some smaller financial institutions have been unable to shoulder these additional costs. Since 2009, about 2,000 credit unions and 1,500 community banks have closed.
It’s a compounding factor of added regulator burden, cost of compliance and focus on conforming to Washington bureaucracy rather than serving our members.
IBJ: Every few years a new administration, depending on its party, shifts gears affecting the financial services industry. Do you expect this is going to be a continuing struggle?
Nussle: Yes – and it’s the reason we support a commission over a single director approach for the Bureau of Consumer Financial Protection; to provide continuity and predictability. We recently renewed our call on Congress to replace the bureau director with a multi-member, bipartisan commission.
IBJ: With the regulatory rollback, does the bill still offer enough protection for consumers?
Nussle: Under the not-for-profit credit union model, it most certainly does because consumers own it. While we can’t speak for for-profit institutions or emerging markets, the bill is still more than necessary given the fact that credit union members — who are American consumers — own America’s credit unions.