CU Leaders Have Engaging Discussions with BCFP and NCUA

National Credit Union Administration (NCUA) Board Chairman J. “Mark” McWatters with credit union leaders from California and Nevada in the NCUA’s board room.
National Credit Union Administration (NCUA) Board Chairman J. “Mark” McWatters with credit union leaders from California and Nevada in the NCUA’s board room.

During the California and Nevada Credit Union Leagues’ annual “Hike the Hill” event in Washington, D.C. last week, credit union leaders from both states met with representatives from the Bureau of Consumer Financial Protection (BCFP)—including Jennifer Stockett, deputy assistant director in the Office of Financial Institutions.

Afterward, leaders also traveled to the National Credit Union Administration’s (NCUA) office to meet with Board Chairman J. “Mark” McWatters.

Meeting with the BCFP (Bureau)
The following was discussed:

  • PACE Financing: One topic discussed was Property Assessed Clean Energy (PACE) loans. Senate Bill 2155 (S. 2155) requires the bureau to prescribe “Ability to Repay” (ATR) regulations that account for the unique nature of PACE financing. Credit union leaders shared stories of how PACE lending has impacted their members, including one story where a credit union is currently having to foreclose on a home because the member did not understand the repayment terms of the PACE loan and is unable to afford the increased tax assessment. They also shared that PACE lenders have targeted not only the elderly with high equity in their homes, but also young, inexperienced home owners. Additionally, credit union leaders stressed that the bureau should look to California’s law on PACE lending when drafting the federal regulations and ensure the regulations: 1) include clear “Know Before You Owe” disclosures so consumers understand the repayment terms and consequences of non-repayment; 2) include strong ATR requirements; and 3) preempt state laws, unless a state has set higher standards.
  • HMDA Reporting: Also discussed was Home Mortgage Disclosure Act (HMDA) reporting. As the bureau plans to revisit the HMDA rulemaking in general, credit union leaders recommended the bureau limit the total HMDA data set for all reporting institutions to only those fields mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act and to exempt home equity lines of credit from mandatory HMDA reporting.

  • International Remittances: International remittance transfers (remittances) were also discussed. As the bureau considers comments received from its 2017 assessment of the remittances rule and from the 2018 request for information on all of their adopted regulations, bureau staff stated they are considering both the exemption threshold (currently only 100 per year) and the 30-minute waiting period. Stockett acknowledged that the 30-minute waiting period is a complaint of both consumers and the financial industry.

Meeting with the NCUA
When credit union leaders met with McWatters later that day, other NCUA senior staff members were present as well—including Chief of Staff Sarah Vega, Deputy General Counsel Lara Rodriquez, Executive Director Mark Treichel, Director of Examination and Insurance Larry Fazio, Director of Credit Union Resources and Expansion Martha Ninichuk, and Director of Business Innovation Kelly Lay. The following was discussed:

  • RBC Rule: The proposed delay and redefined scope of the risk-based capital rule (RBC) was discussed. The NCUA is currently evaluating the comments received. The Leagues and credit union leaders reiterated their suggestion that the board increase the threshold for a complex credit union from $100 million to $1 billion. As of the first quarter of 2018, there were 297 credit unions (approximately 5 percent) with more than $1 billion in assets and holding over 63 percent of total assets in the system. A two-year delay was also recommended, rather than a one-year delay, as it would provide credit unions and the agency sufficient time to implement necessary systems and processes, allow the NCUA time to finalize a supplemental capital rule for RBC purposes, and would be consistent with legislative action to delay the rule, thus providing a consistent target date for covered credit unions’ work efforts.

  • Exam Modernization Initiatives: Much discussion took place regarding the various exam modernization initiatives, including the pilot to conduct certain exam procedures offsite, adopting alternative methods to remotely analyze the financial and operational condition of a credit union, efforts to replace AIRES and the Call Report tool, and the joint NCUA-State Supervisor working group to improve collaboration.

  • Normal Operating Level (NOL): In answer to a question regarding the budget, as well as the NOL, McWatters said he does not, at this time, foresee a need for an assessment in 2019. Regarding the NOL, McWatters and Fazio indicated the 4 basis points added to the NOL for legacy asset volatility would not be phased out incrementally as the legacy assets risk exposure declines; rather, the 4 basis points would remain until June 2021 and the end of the NGN program. That said, they do reevaluate the NOL every year.

  • Bureau of Consumer Financial Protection (BCFP): When asked if the bureau’s Acting Director Mick Mulvaney has responded to McWatters’ request that credit unions over $10 billion in assets be transferred to the NCUA for examination and enforcement of consumer financial protection laws, credit union leaders were told there has been no response yet.

  • Americans with Disabilities Act (ADA): Rodriquez answered a question regarding the ADA website accessibility issue. While the NCUA has not taken an official position, it continues to dialog with the Department of Justice and ask for written compliance guidance.

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