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Week ahead: Next steps unclear after Supreme Court wins

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Two major legal challenges impacting credit unions reached their conclusion Monday morning.

Most importantly to credit unions, the Supreme Court on Monday morning denied certiorari in the American Bankers Association’s long-running legal challenge to the National Credit Union Administration’s 2016 field-of-membership rule. ABA filed its appeal to the court earlier this month, but not enough justices were willing to consider the case. That decision effectively concludes the legal challenge.

“Today’s decision by the Supreme Court ends nearly four years of uncertainty and will help the NCUA in its efforts to foster greater financial inclusion for all Americans," NCUA Chairman Rodney Hood said in a statement. "The NCUA will begin processing field-of-membership applications affected by this decision immediately.”

While ABA expressed disappointment about the outcome and emphasized its belief that credit unions continue to grow beyond the limits of the Federal Credit Union Act, industry groups have praised the decision.

While some credit unions have moved forward with expansion efforts based on the rule, it's unclear whether NCUA should expect to see an increase in those requests now that the matter is settled.

The court on Monday also ruled against the Consumer Financial Protection Bureau, declaring in a 5-4 decision that the bureau’s current leadership structure is unconstitutional, though the justices are allowing the agency to continue.

“The CFPB director has no boss, peers, or voters to report to,” Chief Justice John Roberts wrote in the court’s majority opinion. “Yet the director wields vast rulemaking, enforcement, and adjudicatory authority over a significant portion of the U. S. economy.”

With the court ruling that the president can fire the director, the CFPB is likely to more closely resemble other segments of the executive branch – a decision that could have significant implications for Kathy Kraninger, whom President Trump appointed to lead the bureau in 2018. If former Vice President Joe Biden wins the election in November, he could opt to remove Kraninger rather than allowing her to serve until her term ends in 2023.

Monday’s decision also raises new questions about a pair of credit union-backed bills in the House and Senate that would convert the CFPB from being led by a single director to a multiperson bipartisan commission.

“With today's Supreme Court decision allowing the president to remove the CFPB Director at will, it is essential Congress advance legislation establishing a bipartisan commission at the bureau to promote greater transparency, accountability and long-term stability,” Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions, said in a statement. “A bipartisan board offers stable, long-term leadership that would better provide for the needs of consumers.”

Jim Nussle, president and CEO of the Credit Union National Association, said: "Today’s ruling cements the bureau’s political dependence and subjects consumers and covered entities to wildly severe swings on the regulatory pendulum. Whichever party holds the White House won today; everyone else lost. We call on Congress to put consumer protection ahead of political whimsy by creating a bipartisan multi-member commission that can create tempered, transparent policies at the bureau.”

Outside of court-related business, credit unions continue to watch a number of matters on Capitol Hill.

The Senate continues deliberations this week over the Fiscal Year 2021 National Defense Authorization Act, which still includes language that would grant banks access to the same no-cost land leases on military installations as credit unions. The House Armed Services Committee will hold a markup of its own version of the bill on Wednesday.

One NDAA amendment the industry is closely watching is a provision that could reform the Bank Secrecy Act and anti-money-laundering laws. Senate Banking leadership reached an agreement last week on reforming BSA/AML frameworks that, if passed, would require the Treasury Department to examine the need for both currency transaction reports and suspicious activity reports. Updating the filing thresholds for the aforementioned reports would be examined as well.

The House Financial Services will hear testimony from Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell on Tuesday regarding their departments' responses to the pandemic. The Senate Banking Committee will hold a remote hearing on the digitization of money and payments Tuesday as well.

This story was updated on June 29, 2020 at 2:57 P.M.

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