The federal Credit Union Act is outdated and needs to be modernized, CUNA officials said Monday, in announcing a comprehensive effort to send a plan to Capitol Hill during the next Congress.
“It’s been about 20 years since the Credit Union Act has been updated,” said Ryan Donovan, CUNA’s chief advocacy officer. During that time, state laws governing credit unions have changed, as have federal banking laws.
CUNA’s Credit Union Powers Subcommittee has been examining the issue, he said, adding the association also has contacted member leagues and credit unions to determine areas of the law that are outdated.
He said, for example, the federal law prescribes when a credit union’s fiscal year begins, adding that some credit unions might want to have more flexibility in determining their fiscal years. He said that credit unions might want more flexibility in scheduling their board meetings than is allowed in federal law. And credit unions might want more power to expel abusive members.
In addition, he said, any examination of the federal law should include allowing credit unions to use supplemental capital in certain circumstances and changes to member business lending rules.
Donovan said that CUNA officials expect that Congress will not tackle such an issue and pass legislation overnight.
“We envision a long game here,” he said, adding that “We understand that something like this takes a long time.”
And he acknowledged that once Congress begins examining the Credit Union Act, CUNA and others will have to be prepared to play defense to ensure that provisions are not added that will hurt the industry.
Donovan also outlined several goals CUNA has for 2018. He said Congress will be considering a technical corrections bill to the tax cut legislation enacted last month, adding that the legislation could be another forum for a fight over the credit union tax exemption.
He said that the trade group also will push the CFPB to provide more exemptions for credit unions in its rulemaking process. And association officials want to convince the agency that the NCUA should have the primary supervisory responsibility for large credit unions.
Those efforts have been unsuccessful in the past, but the CFPB will have a new director following the resignation of Richard Cordray. Among the candidates for that job is NCUA Chairman J. Mark McWatters, who has pushed the CFPB to provide such exemptions to credit unions.
Donovan also said that CUNA will continue to push plans to enhance payment security to reduce the impact that merchant data breaches have on credit unions and members. He said that CUNA will continue to pursue litigation when data breaches occur.
