On June 12th, the U.S. Treasury released a report on financial reform that reflects several areas highlighted by credit unions, Leagues and CUNA. The report, titled “A Financial System that Creates Economic Opportunities: Banks and Credit Unions,” is the first of four expected from the Treasury.
CUNA met with the Treasury in April as part of a roundtable discussion with credit unions, and followed up with a letter to Secretary Steven Mnuchin containing recommendations to streaming regulations for the industry. Many of those suggestions are reflected in the Treasury report, which contains the following recommendations for federal regulators:
NCUA:
- Revising risk-based capital to apply to credit unions with $10 billion and over or eliminate requirements for those with 10 percent net worth, raising stress testing threshold to $50 billion and allowing credit unions to rely on appropriately designed supplemental capital to meet a portion of risk-based capital requirements;
- Revisiting current expected credit loss requirements;
- Recommending call reports be simplified and streamlined;
- Raising examination thresholds for an extended exam cycle above the current $1 billion level or eliminating it entirely; and
- Better coordination and rationalization of examination and data collection procedures to promote accountability and clarity.
CFPB:
- Structural reforms that include making the director removable “at-will” instead of “for cause”;
- Funding through the appropriations process and restructuring the civil penalty fund;
- Recommending the bureau issue rules or guidance subject to public notice and comment procedures before bringing enforcement actions and recommending the bureau adopt regulations that more clearly delineate its interpretation of the UDAAP standard;
- Recommending the CFPB bring enforcement actions in federal District Court rather than use administrative proceedings;
- Promulgating a regulation committing the bureau to regularly reviewing all regulations that it administers to identify outdated or unnecessary requirements;
- Reforming the Consumer Complaint Database to make the underlying data available only to federal and state agencies;
- Repealing CFPB’s supervisory authority; and
- Reviewing the ability-to-repay/qualified mortgage (QM) rule, points and fees cap for QMs, threshold for making small creditor QM loans, Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosure rule and delaying the 2018 implementation of Home Mortgage Disclosure Act reporting requirements.
