The Federal Credit Union Act was last rewritten in 1998 and it is sorely outdated for the 21st Century, Credit Union National Association President/CEO Jim Nussle told the Senate Banking Committee in a letter last week.
Since that date, “the financial services sector has changed significantly, but the Federal Credit Union Act and its implementing regulations have not kept pace with technology and how consumers access financial service,” Nussle wrote in a letter to the committee, as it prepared for its confirmation hearing for National Credit Union Administration board Chairman Todd Harper.
President Biden has nominated Harper for a full term on the agency board.
Nussle reiterated CUNA’s position that all federal credit unions should be permitted to extend their fields of membership to underserved areas and that loans made to businesses in those areas should be exempt from NCUA’s member business lending cap.
“Credit unions’ field of membership restrictions and the member business lending cap shut out those that need access to mainstream financial services,” he wrote.
Nussle also encouraged Congress to make permanent the pandemic-related temporary changes to the NCUA’s Central Liquidity Facility. He said those changes expanded the CLF’s borrowing authority and made it easier for credit unions to join the CLF through their corporate credit union.
Nussle also called on Congress to update other areas of the Federal Credit Union Act, including rewriting provisions that:
- Set a maximum 15-year maturity limit on non-mortgage loans made by credit unions. He said CUNA supports legislation introduced by Sens. Tim Scott, R-S.C., and Catherine Cortez Masto, D-Nev. that would increase that level to 20 years.
- Specify when a credit union’s fiscal year starts. Nussle said that a credit union might conduct a significant amount of business with members who have seasonal operations; those credit unions might want to have their fiscal year end when that large wave of financial activity ends.
- State that a credit union board of directors is required to meet monthly. Nussle said that federal credit unions should be permitted to set meetings through their bylaws.
- Require boards of directors to review membership applications and the hiring of loan officers and employees. “These responsibilities are undertaken in the daily operation of the credit union by management staff and are unnecessary and burdensome for a board of directors,” Nussle wrote.
- Require federal credit unions to file with the NCUA the names and addresses of executive officers, supervisory committee members, credit committee members, and loan officers.
- Require a vote of membership to expel a person. Nussle endorsed legislation that has been introduced in the House and Senate that would allow a board of directors to vote whether to expel a member, while also providing for an appeals process for any member who is expelled.