It’s no secret that the last month in the nation’s capitol has been a flurry of activity, changes, and grand sweeping executive orders. With the constantly shifting policies, organizational reforms, and shuttered departments, many are struggling to keep track of all the changes and how these modifications affect them.
Credit unions have not been immune to these reforms either, and trying to figure out how each of these decisions may or may not affect credit union regulations now and in the future can be overwhelming. So today, let’s cover some of the larger credit union topics ongoing in D.C. right now.
The state of the CFPB and overdraft
We covered this topic in a recent article, but the changes to the CFPB came even faster than previously anticipated. While the CFPB staff was quickly laid off and the organization shuttered, credit union trade groups and advocates are not confident this is a permanent change and are continuing legal processes to halt the CFPB’s overdraft and credit card late fee rule.
America’s Credit Unions filed a lawsuit against the rule the day it was issued, though the CFPB has filed a motion to request a stay in these hearings, due to the agency’s change in leadership.
America’s Credit Union’s CEO and President, Jim Nussel, did not go so far as to agree with shuttering the agency, but he did call for it to return to its intended purpose: keeping consumers safe from bad actors and fraudulent financial institutions. Additionally, he called for the agency to use its power to exempt credit unions from these regulations and rulings.
Furthermore, an executive order from just last week would require the CFPB to entirely eliminate the Credit Union Advisory Council, which served as an essential source of communication between the organization and the credit union industry. The termination of this communication pathway would remove the seat at the table for credit union advocacy groups to share how CFPB rulings would impact credit unions and their members.
While America’s Credit Unions spoke out against this change as well, the order remains in place. Though should the CFPB remain stagnant and shuttered, it may not matter much in the end.
Fighting for tax exemption
Since the passing of the Federal Credit Union Act, credit unions have been fighting to keep their tax-exemption status. The newest attack came from Republican lawmakers last month, who in a 50-page document on ways to cut costs listed removing the credit union tax exemption as a means to increase revenue by $30 billion over ten years.
Quickly following this proposal, a former FDIC chairwoman, Sheila Bair, encouraged the government to rethink the tax exemption, claiming that credit unions had been abusing the privilege.
“Too many [credit unions] have been egregiously abusing their tax benefits, costing the government needed tax revenue while creating even more challenges for community banks, which already struggle with excessive regulatory burdens.” Blair wrote. “Policymakers should at the very least use this year’s debate over tax reform to take a fresh look at credit union policies.”
In response, America’s Credit Unions has launched a defense campaign, Don’t Tax My Credit Union, and submitted letters to Congress, outlining the good work credit unions are able to do thanks to the tax exemption. You can find out more about this in Joshua Velasquez’s article Don’t Tax My Credit Union, and at GAC next week, which will have breakout sessions devoted to educating credit unions on how they can take part in the movement.
NCUA independence being stripped away
Just last week, the current administration signed an executive order that would bring the entire executive branch under the authority of the president. While the executive order did not directly name them, the policy would include the National Credit Union Administration (NCUA), which up until now, has served as an independent regulator.
Under this new rule, the NCUA would need to submit all regulatory actions to the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President. It would also require the NCUA to have an official liaison to the White House. Credit union advocacy groups have been widely outspoken in their disagreement with this order, citing the need for credit unions to have a regulatory council that is independent of the sitting president.
“The NCUA’s independence allows it to make unbiased decisions that prioritize the safety and soundness of credit unions without undue influence from political or external pressures,” said Nussle. “This autonomy ensures that regulatory actions are based on sound financial principles and the best interests of credit union members, rather than short-term political considerations. Furthermore, the NCUA’s funding structure—supported by credit unions and their members, not taxpayers—reinforces its ability to operate independently and effectively.”
GAC next week
All of these topics and more are sure to be covered at the Governmental Affairs Conference, hosted by America’s Credit Unions, in Washington D.C. next week.
If you’re unable to make it to the conference to hear all about how these changes are impacting the industry, don’t fret. CUSO Magazine will be on the scene throughout the week, reporting all the latest industry news and developments, so stay tuned for more details! If you want to get our GAC reports directly to your inbox, you can subscribe at cusomag.com/subscribe! We’ll see you there!
