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Federal Reserve Vice Chairman of Supervision Randal Quarles finished the regulator's semiannual report to Congress Thursday as he testified before the Senate Banking Committee. During the hearing, a number of issues that impact credit unions were brought up, including the current expected credit loss (CECL) accounting standard, tailoring regulations and regulators' accountability, among others.

NAFCU will meet with Quarles later this month to discuss industry priorities, credit unions' use of Fed services to meet members' needs and the association's annual Report on Credit Unions.

During Thursday's hearing, Sen. Doug Jones, D-Ala., asked Quarles about the unintentional consequences of the Financial Accounting Standards Board's (FASB) CECL standard, which Quarles said the Fed hopes to understand during the three-year phase in period. The issue was also brought up a number of times during Wednesday's hearing with the House Financial Services Committee.

NAFCU continues seek more guidance for the industry on the issue, and has encouraged FASB and the NCUA to coordinate. FASB on Thursday finalized NAFCU-sought changes – including a delay in the standard's effective date for credit unions (read more here).

Sen. Bob Corker, R-Tenn., also inquired about the Fed's efforts to tailor regulations and the possible effects on the safety and soundness of the industry.

"We have two principle concerns as regulators: We have concern for the safety and soundness of individual institutions, and we have a concern for the safety and soundness of the system as whole and for the efficiency of the system as whole," Quarles said. "All of us as citizens benefit from the efficiency of the financial sector. That's what provides the support for economic growth, provides credit for small businesses and business generally … Our concern is that that system should be operating as efficiently as possible, and our regulation of that system, while achieving the objective of safety and soundness, is doing so in the most efficient way that's practical because when we do that we support economic growth that benefits us all."

The Fed recently released a proposal to better align regulations with banks' risk profiles; NAFCU has encouraged the NCUA to take a similar approach to provide credit unions with regulatory relief, arguing that size does not equal risk and there are other factors that should be considered when creating regulations and exemptions.

Responding to another question from Corker related to Fannie Mae and Freddie Mac, Quarles indicated the need for a comprehensive solution to housing finance reform. The association continues to work with Congress, the administration and other government entities to ensure credit unions have unfettered access to the secondary mortgage market in any housing reform efforts.

Quarles also discussed staff accountability at the Fed following a question from Senate Banking Committee Chairman Mike Crapo, R-Idaho, that referenced Operation Choke Point. NAFCU has opposed such policies that are used by regulators to keep financial services away from a member without a material reason; NAFCU witness John Lewis earlier this year offered the association's support for legislation that ensure "Operation Choke Point"-type policies aren't used by regulators.