Regulatory Reform Bill is Law – What Now?

A special message from Mary Martha Fortney, President and CEO,
July 27, 2010

Amid filibusters, all-night conference debates and two years of hearings and mark-ups, a comprehensive regulatory reform bill, the Dodd-Frank Act, was signed by the President on July 21.

Now that it's law, what's next for state regulators and state credit unions?

The Act requires 243 new rules, 67 one-time reports and 22 periodic reports. Not all of these regulations will apply to credit unions or state regulators, but NASCUS will continue its efforts to communicate the state credit perspective throughout the rulemaking process, where

We will also continue to encourage Congress to defend against preemption and to make certain that state credit unions remain primarily regulated by those who know their communities and operations best – state regulators.

One of the main elements of the legislation is the establishment of the Consumer Financial Protection Bureau (CFPB), housed at the Federal Reserve. For financial institutions, including credit unions, with under $10 billion in assets, consumer protection examination will remain with the prudential regulator. State consumer protection laws can only be preempted on a case-by-case basis, and state attorneys generals can enforce forthcoming new federal consumer protection rules in addition to state law.

Concerning interchange fees, the Federal Reserve is directed to set a “reasonable” rate for interchange fees for debit cards. Government issuers are exempt, as well as financial institutions under $10 billion in assets.

The Dodd-Frank Act makes permanent the deposit insurance increase to $250,000 for credit unions, banks and thrifts, and insures noninterest bearing accounts.
To address systemic risk, the law establishes a new Financial Stability Oversight Council charged with monitoring and tackling systemic risk, as well as identifying and imposing certain regulatory requirements for financial entities posing system-wide risk. The Chairman of the National Credit Union Administration is a voting member of this Council. Also, a state banking supervisor, state securities commissioner and state insurance commissioner are included in the Council as nonvoting members. The state regulatory and credit union voices on this Council are critical as the nation works to manage systemic risks to our financial institutions.

Of course, there is much more to come as this legislation is implemented. NASCUS continues to study the law to understand the additional impacts on state regulators and state-chartered credit unions.  We will be particularly interested in your views and comments as work continues in the coming months on the regulations required by the new law. 

Our legislative advocacy on behalf of the state credit union system remains integral to our work. We are continuing our efforts to achieve supplemental capital for credit unions, in addition to promoting the legislative interests of state regulators and state credit unions.