Every two years we are reminded that change is inevitable in Washington. The upcoming midterm elections will bring new faces to Capitol Hill, and with them new perspectives.
For credit unions, this means more opportunities to educate new lawmakers on the mission and focus of the industry. Credit unions are the poster child for safe and trustworthy consumer financial services and enjoy bipartisan support across many issues – a unique and welcomed position. Therefore, when the industry says it needs a regulatory and legislative environment in which credit unions can grow and thrive – lawmakers listen and act.
This is a huge advocacy advantage – especially during an election year. As the industry builds new and grows current relationships with lawmakers, there are several issues that should remain at the surface.
Regulatory relief
The bipartisan passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) earlier this year was a great first step on the road to providing much-needed regulatory relief to credit unions. Reducing burdensome and unnecessary regulatory compliance costs will better enable credit unions to thrive and provide their member-owners with safe, affordable financial products and exemplary service. Credit unions must have a positive and fair regulatory environment in order to succeed.
There is no reason why more relief is not attainable this year and into the next Congress, but vigilance is key.
Since the enactment of the Dodd-Frank Act, the nation has lost more than 1,800 federally-insured credit unions. Overregulation of the industry has played a significant role in why many credit unions have been merged out of existence or shut their doors for good.
The good news: The industry has proof that regulatory relief is achievable.
Data security
Data security is on Congress' radar yet again this year and for good reason. The number of U.S. data breach incidents tracked in 2017 by the Identity Theft Resource Center hit a new record high of 1,579; a 44.7 percent increase over the figures reported for 2016.
Legislation was recently introduced by House Financial Services Subcommittee Chairman Blaine Luetkemeyer, R-Mo., that would establish national data breach notification requirements for all financial entities – including the credit bureaus.
Credit unions have been pushing for national data security standards since the 2013 massive Target data breach. Financial institutions are on the front lines defending against data breaches every day; when they inevitably come, they are the ones picking up the significant costs to make their members whole again.
Protecting the payments system should be a shared responsibility by all parties involved. All entities must work together and invest in the necessary resources to combat the increasingly sophisticated threats to the system.
Congress-approved data security legislation should recognize the good work of credit unions and ensure that all entities that handle sensitive financial and personal information protect consumer information and provide notice in the event of a breach.
Americans with Disabilities Act
While credit unions are still being targeted by meritless lawsuits over unclear website accessibility standards under the Americans with Disabilities Act (ADA), the industry has seen some wins come out of the court system. Credit unions strongly support the protections of the ADA and efforts to ensure individuals with disabilities are not discriminated against and have equal access to financial services, but this is best achieved through clear guidance and standards for website compliance, not through costly lawsuits.
Congress is aware of this issue and has asked the Department of Justice to address it as soon as possible. A letter signed by more than 100 lawmakers and sent to Attorney General Jeff Sessions earlier this year, pointed out that the number of lawsuits filed related to website accessibility standards under the ADA was 14 times greater in 2017 than 2015.
Credit unions should keep pressure on lawmakers so those attorneys seeking to exploit areas of unsettled law are stopped.
Capital reform
Credit unions should continue seeking legislative reforms to achieve a true and fair risk-based capital system.
Bipartisan legislation (H.R. 5288) offered by Reps. Bill Posey, R-Fla., and Denny Heck, D-Wash., seeks to address credit union concerns with the National Credit Union Administration's RBC rule. In fact, language from this bill, which would provide a two-year delay of the rule, has passed the House three times this year. In August, the NCUA issued proposed amendments to its RBC rule that would delay it by one year and change the definition of a complex credit union.
While this issue is headed in the right direction, credit unions should keep talking with lawmakers and the NCUA to ensure appropriate capital levels for the industry.
Not only are all these issues bipartisan, but they have also received some form of congressional action. This only reaffirms the confidence and support elected officials have in credit unions and their member-owned, not-for-profit business model.
This is shaping up to be an exciting election year and when a new Congress convenes in January, those issues that draw bipartisan support and common ground will likely take precedence. There is no reason why some of those issues shouldn't favor the credit union industry.
Looking ahead to next Congress, Senate Democrats have 26 seats up for reelection in November; Republicans, only nine. On the House side, Democrats need to win back just 24 seats to overtake the majority.
Simply put: The industry needs to continue its reach across both sides of the aisle – as it has always done. This will ensure new opportunities are created that will result in a much-needed positive regulatory environment in which credit unions can thrive.
