CUNA Pushes to Update the Federal Credit Union Act
The federal Credit Union Act is outdated and needs to be modernized, CUNA officials said, in announcing a comprehensive effort to send a plan to Capitol Hill during the next Congress.
“It's been about 20 years since the Credit Union Act has been updated,” Ryan Donovan, CUNA's chief advocacy officer, said. During that time, state laws governing credit unions have changed, as have federal banking laws.
CUNA's Credit Union Powers Subcommittee has been examining the issue, he said, adding the association also has contacted member leagues and credit unions to determine areas of the law that are outdated.
Donovan said CUNA has been asking credit unions about what they would like to see in an updated law. That conversation continues, he said.
“We’re still talking with our members,” Donovan said.
He said, for example, the federal law prescribes when a credit union's fiscal year begins, adding that some credit unions might want to have more flexibility in determining their fiscal years. He said that credit unions might want more flexibility in scheduling their board meetings than is allowed in federal law. And credit unions might want more power to expel abusive members.
Donovan also said any amended law should specifically allow for balloting by electronic means when members are asked to vote on something.
In addition, he said, any examination of the federal law should include allowing credit unions to use supplemental capital in certain circumstances and changes to member business lending rules.
Donovan said CUNA officials expect that Congress will not tackle such an issue and pass legislation overnight.
“We envision a long game here,” he said, adding, “We understand that something like this takes a long time.”
And he acknowledged that once Congress begins examining the Credit Union Act, CUNA and others will have to be prepared to play defense to ensure that provisions are not added that will hurt the industry.
Donovan also outlined several goals CUNA has for 2018. He said Congress will be considering a technical corrections bill to the tax cut legislation enacted last month, adding that the legislation could be another forum for a fight over the credit union tax exemption.
That fight also could play out in state legislatures, where the banking industry typically attempts to eliminate the tax exemption.
But Donovan said the credit union industry was successful in last year's tax debate and legislation.
“We just won an enormous victory,” he said.
He said the trade group also will push the CFPB to provide more exemptions for credit unions in its rulemaking process. And association officials want to convince the agency that the NCUA should have the primary supervisory responsibility for large credit unions.
Those efforts have been unsuccessful in the past, but the CFPB will have a new director following the resignation of Richard Cordray. Among the candidates for that job is NCUA Chairman J. Mark McWatters, who has pushed the CFPB to provide such exemptions to credit unions.
McWatters wrote Cordray a letter last year pressing the director to expand the use of exemptions, but that request was ignored.
CUNA will also press the CFPB to fix rules that are burdensome to credit unions and to slow the rulemaking process down.
And he said CUNA wants to ensure that the CFPB retains the Credit Union Advisory Council, which attempts to provide the bureau with the credit union perspective on the impact of regulations.
Donovan also said CUNA will continue to push plans to enhance payment security to reduce the impact that merchant data breaches have on credit unions and members. He said CUNA will continue to pursue litigation when data breaches occur.
Additionally, he said CUNA will press state legislatures to enact strict data security legislation. That type of legislation on a state basis could help put pressure on Congress to enact data security legislation on a national level.