WASHINGTON — The National Credit Union Administration's controversial risk-based capital rule received a much sought-after delay this week after the House voted 217-199 on a spending bill that included a measure to push implementation of the rule back until 2021, a further two years from the original implementation date.
The RBC provision has now passed three times as part of three different pieces of legislation, having been included not only in both the spending bill and the JOBS Act 3.0 package, but also in the Foreign Investment Review and Modernization Act, which has moved through the House as is currently in committee in the Senate.
Credit union trade groups have praised the House for further delaying one of the most unpopular rules to ever emerge from NCUA.
"We thank House leadership for passing regulatory relief measures that will greatly benefit credit unions," said Credit Union National Association President and Chief Executive Officer Jim Nussle. "CUNA has maintained since NCUA first proposed the risk-based capital rule that it is a solution in search of a problem, so we support any legislative means to reduce the rule’s impact on credit unions."
The National Association of Federally-Insured Credit Unions also commended the House move, with NAFCU EVP and General Counsel Carrie Hunt noting in a statement “NAFCU has led this charge on behalf of America’s credit unions, and enacting this legislation would give them more time to comply with the rule while also giving the NCUA time to revise it. On behalf of our membership and the entire credit union industry, NAFCU thanks Chairman Graves for his leadership and hard work in producing this common sense measure.”
Along with the RBC provision, the House spending bill also gives the Federal Reserve sole control over the Volcker Rule and reduces the frequency of living will submissions to every two years.
While the deregulatory provisions are likely to get watered down in the Senate, both chambers must agree on a budget by the end of September to keep the government open.
Bank industry groups praised those measures, but some are seeking additional changes, including more funding for the Community Development Financial Institutions program. The House bill would set CDFI funding at $223 million, while the Senate version has a higher level of $250 million.
“While we commend the inclusion of these provisions, ABA also supports amendments that would restore full funding for the Community Development Financial Institutions (CDFI) program,” said James Ballentine, the American Bankers Association's executive vice president for congressional relations and political affairs. “The CDFI fund, and the programs it supports, has become invaluable in helping banks serve credit markets and communities that might not otherwise be served.”
Credit union groups continue to push for full funding of the CDFI fund.
The provision to require large banks to submit living wills every two years instead of annually is also part of the Jumpstart Our Business Startups Act, which passed the House earlier this week, and is considered uncontroversial. The Volcker Rule measure, however, did not get enough bipartisan agreement to be included in the third iteration of the JOBS Act.
The budget bill would also enable banks to have an outside examination review director review material supervisory determinations by the Consumer Financial Protection Bureau and would expedite the process for banks to appeal examination findings.
The spending measures come after a bipartisan Senate package passed Congress and was signed into law by President Trump in May, which eased some of the Dodd-Frank Act’s regulations on community banks and credit unions.
Republicans, particularly in the House, have pushed for further measures. But the prospects for the JOBS Act 3.0 and the budgetary bill are unclear in the Senate.
Additional measures included in the House version of the spending bill would amend the Real Estate Settlement Procedures Act to require the CFPB to allow the accurate disclosure of title insurance premiums and any potential available discounts to homebuyers, and create an independent inspector general at the CFPB.