In 2014, "Enough is enough" was NAFCU's rallying cry for the overwhelming regulatory burden on credit unions. NAFCU steadfastly advanced that message from Capitol Hill to the White House and beyond, yielding victories in many areas.

Pushing For Improvements

To Risk-Based Capital Proposal

NAFCU was relentless in its efforts to obtain a second comment period on NCUA's risk-based capital proposal, which is expected to be released in January. Along with NAFCU, there were over 2,000 letters submitted to the agency on its proposal. The proposed measure also drew the consternation of more than 325 members of Congress, who wrote to NCUA expressing their concerns. There were also many meetings with NCUA and testimony delivered on Capitol Hill on the proposal. NAFCU pushed for risk weights that are reasonable and an implementation period of at least three years. We will carefully examine the new proposal to evaluate the full impact on credit unions. We also continue to support legislative changes to create a risk-based capital system that is fair for all credit unions.

Advocating For Greater Transparency

After NAFCU's hard-fought efforts, NCUA made significant strides in the area of transparency, specifically regarding its budget process. At the November board meeting, NCUA Chairman Debbie Matz and NCUA Vice-Chairman Rick Metsger committed to greater transparency and announced the agency would be releasing disaggregated information about certain line items in the 2015 Operating Budget. NCUA Board Member J. Mark McWatters emphasized, however, that he believes NCUA's budgeting process needs further transparency and increased participation from industry stakeholders. NAFCU wholeheartedly agrees. NCUA Board Member McWatters recommended a formal budget hearing before the agency approved its annual operating budget, a concept NAFCU has also advanced. While these efforts are steps in the right direction, we continue to urge NCUA to be more transparent about how it manages and spends credit union dollars. Because every single dollar spent by NCUA starts as a dollar from credit union somewhere in the United States, NAFCU will continue to push for greater transparency from NCUA.

Removing Outdated Rules

We also sought to remove or improve outdated credit union rules. Matz announced a proposal to eliminate the 5% cap on federal credit union ownership of fixed assets. NAFCU has long advocated relief for credit unions from this cap and has included it in the association's "Dirty Dozen" list of rules it would like to see improved or eliminated.

Safeguarding the CU Tax Exemption

House Ways and Means Chairman Dave Camp (R-Mich.) in February released a much-anticipated tax reform discussion draft. It was officially introduced in December as H.R. 1, the Tax Reform Act of 2014. While the credit union tax exemption was not threatened in the draft, NAFCU will keep protection of the tax exemption as its top priority.

Pressing For National Data

Security Standards For Retailers

NAFCU was the first financial institution trade association to address the need for national data security and breach notification standards for retailers in the wake of the costly Target data security breach last year. We kept up the drumbeat on this issue throughout 2014. We pressed for Senate action on S. 1927, the "Data Security Act of 2014," which would increase requirements for businesses without burdening financial institutions. NAFCU also urged Senate action on S. 2588, the "Cybersecurity Information Sharing Act," which would encourage information sharing on cyber threats among the business community and the government while still ensuring privacy.

Although Congress has yet to pass a data security measure, the issue continued to gain traction. In October, at an event at the Consumer Financial Protection Bureau that I attended, President Obama urged Congress to "act with urgency" on data breach legislation. He noted the variety of state laws on data security and called for "one clear national standard that brings certainty to business and keeps consumers safe." The president also signed an executive order calling for chip-and-PIN on newly issued and existing government credit cards and debit cards; and upgrading retail payment card terminals at federal agency facilities to accept chip-and-PIN. Acknowledging there is no silver bullet to guarantee data security, the president nonetheless called on stakeholders to harness enhanced security measures. The president also said the White House will convene a Summit on Cybersecurity and Consumer Protection later this year. NCUA Chairman Matz also joined NAFCU's call to hold retailers accountable for cost of breaches. U.S. District Judge Paul Magnuson ruled in December that financial institutions claiming to have spent billions of dollars replacing their customers' compromised credit and debit cards may proceed with a negligence class action against Target.

Seeking Legislative Reforms

There were also numerous legislative wins that advanced NAFCU's five-point plan for regulatory relief:

  • The Homeowner Flood Insurance Affordability Act of 2014 became law. It delays increases in flood insurance premiums that were part of the "Biggert-Waters Flood Insurance Reform Act of 2012."
  • President Barack Obama signed into law H.R. 3468, the "Credit Union Share Insurance Fund Parity Act," would ensure credit unions have parity with FDIC-insured institutions when it comes to escrow accounts like Interest on Lawyer Trust Accounts (IOLTAs). 
  • H.R. 749, the "Eliminate Privacy Notice Confusion Act," also passed by the House, would eliminate the requirement for financial institutions to send annual privacy notices to consumers if the policy has not changed.
  • Passed by the House, H.R. 3211, the "Mortgage Choice Act," clarifies the definition of points and fees under the Truth in Lending Act as applied in CFPB's qualified mortgage rule to allow corrections following loan consummation under certain circumstances.
  • The House earlier this month passed H.R. 3240, the "Regulation D Study Act," which would mandate a Government Accountability Office study of the impact of the Fed's monetary reserve requirements on depository institutions, consumers and monetary policy. NAFCU believes a study of this outdated requirement would result in a full repeal of the regulation.

Throughout the year, NAFCU also had numerous credit union leaders testify on its behalf to ensure credit unions' interests remained at the forefront of lawmakers in the House and Senate, particularly as they advanced legislation focused on regulatory relief, housing finance reform, data security and more.
Ultimately, much was accomplished, but much remains to be done. With a new Congress in January, NAFCU will renew its efforts to reduce CUs' regulatory burden and champion the value of CUs in 2015. Your continued engagement and exemplary record of service to your members will be a critical part of our success. Together, we can make 2015 a stellar year for credit unions.

Dan Berger is president and CEO of NAFCU. He can be reached at 703-522-4770 or dberger@nafcu.org.