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The House Financial Services Committee on Wednesday approved legislation which would require federal financial regulators to develop a strategic plan to encourage the chartering of new credit unions and banks.
The panel approved H.R 4590 by voice vote.
The bill, sponsored by Rep. Jake Auchincloss, D-Mass., would require the regulators to conduct an 18-month study examining the challenges that newly chartered credit unions and banks face. Following that study, the regulators would be required to develop a strategic plan to promote creation of new financial institutions, particularly minority depository institutions and community development financial institutions.
In a memo prepared for the hearing, Democratic committee staff noted that in 1985, there were more than 15,000 credit unions; today, there are a little more than 5,000. “Starting and maintaining a credit union is tough work,” Auchincloss said during Wednesday’s markup, adding that “not enough is being done” to make it easier.
While they said they would support the legislation, some committee Republicans said that the issue already has been studied. “I’m not sure that another study is necessary,” said Rep. Andy Barr, R-Ky. “We’ve got a lot of studies that are collecting dust on the shelves.” He called on the committee to support his legislation that would require federal regulators to phase in capital requirements in an effort to encourage the establishment of new financial institutions.
Credit Union National Association President/CEO Jim Nussle endorsed Auchincloss’ bill, writing in a letter to the committee, “A challenge credit unions face in serving underserved and unbanked communities is the high regulatory burden to create new or de novo credit unions.” He said that the regulatory regime established in the Dodd-Frank Act made it even more difficult.
“Chartering a credit union is a time-consuming and complex endeavor – including identifying capital sources, determining field of membership, developing a business plan, appointing a board of directors,” Nussle wrote. He said it can take three years or longer for a new credit union to be chartered.
National Credit Union Administration Vice Chairman Kyle Hauptman has said that he wants to focus on ways to simplify the credit union chartering process.
