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Regulatory Roundup

Mon, Jan 23, 2017

Columbia, Maryland

The Association continues to speak with Hill staff to get any intel that might be useful moving forward under the new Trump Administration. Senate Minority Leader Chuck Schumer and Banking Committee Democrats have vowed to fight any attempts to replace the CFPB single-director structure with a commission, according to a senior Democrat Committee staffer.

According to the staffer, Schumer met recently with Ranking Member Sherrod Brown and Sen. Elizabeth Warren to map out a "complete resistance strategy" to any Commission, even after Cordray's term expires in July 2018.  This is in the face of two threats to Director Cordray's continued service:

  • Last year's US Appeals Court decision, still unresolved, that would permit President Trump to remove Cordray prior to the end of his term; and
  • Dodd-Frank Act reform legislation would create a 5-member CFPB board.  The House version of the bill already contains such a provision and Senate Republicans are very likely to follow suit.


The NCUA board voted 2-0 in favor of issuing an advance notice of proposed rulemaking on alternative capital for federally insured credit unions. The rule is out for a 90-day comment period. Both Chairman Metsger and Board Member McWatters emphasized the importance of credit unions sharing their input in the shaping of a rule that the agency admits it is not an expert in creating.

Metsger emphasized that the ANPR is a 50-page outline of a complicated rule that would address several forms of capital and several ways for it to be structured. Metsger, also noted that although more than 2,000 low income designated CUs now have access to secondary capital, only about 3% take advantage of it. McWatters emphasized a similar point. “There has for a long time been discussion about the forms of capital for credit unions—this has gone on for many years. This is the first full-bore attempt to address this issue.  

The notice seeks comment on a broad range of topics, including:

  • Associated regulatory changes that would be necessary;
  • Potential tax implications related to issuing alternative capital, particularly for state-chartered credit unions;
  • Potential director and management liability issues from issuing alternative capital;
  • Investor protection issues and whether the sale of secondary capital, like supplemental capital, should be restricted to knowledgeable institutional investors;
  • The impact of alternative capital on the mutual ownership structure of credit unions; and
  • The application of securities law to both supplemental and secondary capital.

Agency staff stressed that supplemental capital and secondary capital are two separate things and should not be confused. The agency has stressed that alternative forms of capital will mean new rules and potentially even other regulators for a credit union to deal with in the SEC and OCC—and that credit unions that turn to supplemental capital would need to deal with rules related to broker-dealers, investor advisory roles, state regulations and filing fees.

The association urges credit unions and stakeholders to weigh in on this important issue. As McWatters stated, [credit unions] “will be the ones issuing the capital, if the rule does not work in the marketplace for you…this is all for naught.”

Comments are due to the NCUA within 90 days of the ANPR’s publication in the Federal Register. The Association will work with any interested members and stakeholders to draft comments.

Contact: Glen Cooney, 443-325-0775,