Newsroom

NAFCU's Ed Templeton told the Senate Banking Committee yesterday that credit unions are straining under regulatory burden and told the committee's chairman of the major disconnect between the views of regulators and the regulated on this score. He used NCUA's risk-based capital proposal as a case in point.

Templeton, NAFCU's chair and the president and CEO of SRP Federal Credit Union in North Augusta, S.C., testified in the committee's second hearing this week on regulatory relief. He was asked by committee Chairman Richard Shelby, R-Ala., whether NCUA had done sufficient analysis on the cost vs. benefit of its latest RBC proposal. Templeton said it did not.

"The current proposal is a significant improvement," he said. However, he added, if the current proposal were applied retrospectively to the financial downturn, 95 percent of the credit unions that would have been problematic came through the crisis soundly. "I think that's a good indication that it's not necessary."

Sen. Mike Crapo, R-Idaho, asked all witnesses – representatives from the American Bankers Association, CUNA, Independent Community Bankers of America, Center for Responsible Lending and NAFCU – to submit in writing their top five to 10 ideas that would immediately give their financial institutions regulatory relief without upsetting the safety and soundness of the industry. Sen. Heidi Heitkamp, D-N.D., made a similar request.

Furthermore, Shelby requested comments from individual institutions about the regulatory burden they face and how it's impacting their day-to-day activities. NAFCU will remain in contact with Shelby on this request. If your credit union would like to submit comments, please contact Carrie Hunt, NAFCU's senior vice president of government affairs and general counsel, at chunt@nafcu.org.

Templeton, who testified on behalf of NAFCU, said NCUA's cost-benefit analysis on RBC2 falls short.

The hearing Q&A also focused on CFPB's qualified mortgage and ability-to-repay rules. Templeton, responding to a question from Sen. Joe Donnelly, D-Ind., said after CFPB issued its QM rule, his credit union planned to not do any non-QM mortgages; in the end, the credit union decided not to lend to members who were "on the fringe." This despite his credit union's record of losing on just two loans in a 25-year span.

Thursday's hearing discussion also addressed small institutions' costs adding compliance staff, possible structural changes at CFPB and the need for an independent exam process.

Shelby this week acknowledged the regulatory burdens of credit unions and community banks, and he said he looked forward to working with committee Ranking Member Sherrod Brown, D-Ohio, on legislation to address that.