Looking Into 2012: Regulatory and Legislative Landscape

A special message from Mary Martha Fortney, President and CEO,
December 2011

As 2011 wraps up, NASCUS is planning for the New Year and assessing the regulatory and legislative landscape for state regulators and state-chartered credit unions.

On the regulatory front, there are several issues from this year that will continue into 2012, in particular, from the National Credit Union Administration (NCUA). In July, the NCUA issued a proposed rule that would expand reporting requirements for Credit Union Service Organizations (CUSOs). In our comments, NASCUS urged NCUA to leverage existing authority to mitigate CUSO risk and to partner with state regulators on CUSO supervision. NCUA is currently reviewing comment letters and is expected to issue a revised rule in the spring.

Also in the coming months, the NCUA will probably issue a proposed rule regarding loan participations. NASCUS will work to ensure that the rule equitably balances regulatory concerns with state authority. Further, we expect NCUA to issue its final rule regarding interest rate risk as well as guidance on troubled debt restructuring and derivative use for federal credit unions. In addition, NCUA and the other federal financial agencies will release a final rule stemming from the Dodd-Frank Act on the disclosure of incentive-based compensation for institutions with more than $1 billion in assets.

As you know, in July 2011, the Federal Reserve (Fed) issued the highly-anticipated final rule regarding debit interchange fees. The final rule caps interchange debit card fees for institutions with more than $10 billion in assets at 21-cents with a five basis points per transaction for fraud costs. The final rule became effective Oct. 1, 2011. The Fed has committed to monitoring the impact of the rule on smaller institutions and we expect that the agency will report back on this aspect sometime in 2012.

The new Bureau of the Consumer Financial Protection (CFPB) continued to ramp up in 2011. The CFPB issued a first version of an Examination Manual and continued work on consolidating mortgage disclosure forms required by Truth in Lending (TILA) and the Real Estate Settlement Procedures Act (RESPA). On July 21, the agency inherited all consumer financial protection statutes from other agencies and in late November, issued a notice of rulemaking requesting comments on how to streamline the regulations. Next year will likely prove to be a busy year for the CFPB. NASCUS will continue to act as a liaison between the CFPB and state credit union regulators into the next year.

Regarding legislation, NASCUS will continue to monitor several bills regarding credit unions for the remainder of this year and into the second session of the 112th Congress. In particular, we will continue to monitor legislation to increase the member business lending cap for qualified credit unions. In addition, recently, a bill was introduced addressing "exam fairness" that would impact the NCUA.  We will monitor this legislation to ensure it does not impact state regulators and state credit unions. NASCUS will continue to advocate for the legislative change to the federal definition of net worth to allow all credit unions the opportunity to raise supplemental capital, a reform that is also supported by NCUA Chairman Debbie Matz.

In addition to regulation and legislation, NASCUS remains focused on our accreditation program and to providing education to state examiners and state-chartered credit unions. We are proud to announce that our regulatory-focused Directors College series has now trained more than 1,250 directors in 15 states. Further, we will continue to encourage state agencies to partner with us on the education they need for their states through NASCUS’ onsite schools. Our annual conference, the State System Summit, is scheduled for Sept. 12-14 in Denver, Colorado. We encourage you to “Save the Date” for the 2012 Summit, the only annual gathering of the state credit union system.

As 2012 approaches, I want to again express my appreciation for NASCUS member support of our efforts in behalf of the state credit union system. Your support allows us to be successful with our legislative advocacy, regulatory analysis and educational programs for state regulators and state-chartered credit unions. We look forward to another successful year at NASCUS.