In a letter to NCUA Chairman Kyle Hauptman last week, Senator Elizabeth Warren, ranking member of the Senate Committee on Banking,
Housing, and Urban Affairs, shared her concerns over the deregulation push the NCUA has been conducting since December of last year, rolling back over 30 rules in 11 different rounds of deregulation.

Warren stated that the rollbacks “threaten the stability of the credit union system,” and questioned Hauptman’s authority to even approve this project, given the current one-member status of the board. In her letter, she cited Federal law, which states the board is required to be composed of three members, with at least two present to take action (though it has been argued that one board member can qualify as a quorum on his or her own).

“All of these actions are making our credit union system more unstable and vulnerable. This is particularly concerning given that the credit union system was designed to serve people who have the least access to the traditional banking system,” wrote Warren. To that end, Warren highlighted the removal of the following rules as particularly concerning:

• “Eliminating the segregated deposit and collateral requirements, which require credit unions to have adequate collateral when a credit union acts as a guarantor for a member. Without this proposal, a credit union could experience losses if a debt obligation comes due and the credit union is holding insufficient collateral. If the credit union is unable to withstand these losses, the Share Insurance Fund would ultimately be on the hook.
• Eliminating nondiscrimination requirements stemming from the Fair Housing Act and the Equal Credit Opportunity Act (ECOA). While the Fair Housing Act and ECOA laws are still in effect, removing the NCUA’s regulations introduces uncertainty for examiners assessing credit unions’ obligations under these laws. Additionally, it signals that fair lending is not a priority for the agency.
• Eliminating the requirements on how disclosures related to a proposed merger between credit unions must be communicated to its members. Credit unions, unlike banks, are owned by its members and they ultimately vote to approve or reject a merger. If these disclosures are not presented in a clear and concise manner, members are unable to make an informed decision.
• Eliminating the requirement for federally-insured credit unions to give its members at least 30 days notice if it plans to end supplemental share insurance coverage. Reducing share insurance coverage puts members’ shares at risk, especially if they do not have adequate time to restructure their accounts to ensure maximum coverage.
• Removing the requirement that new Board members obtain post-election training in finance and accounting. This rollback is particularly concerning, as most credit union board members are volunteers and are usually members of a community instead of banking or finance professionals.”

To address these concerns, Warren has requested a briefing on the deregulation project with Hauptman no later than July 16th. She also included a list of questions she would like Hauptman to answer during this time, including how each of the regulations to roll back were chosen, who selected them, how they determined if their actions would have any adverse effect on the credit union system, and more.

“It is critical that the NCUA maintain strong supervisory and regulatory safeguards to ensure the safety and soundness of the credit union system,” Warren concluded.

To review Warren’s entire list of questions and concerns, you can read the letter in full.