An Election Year May Mean Less Lawmaking, More Regulating

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By Sheryl S. Jackson

A closely-divided Congress and a midterm election combine for a great deal of uncertainty in 2022 in terms of legislative and regulatory activities, but there are a number of issues that credit union leaders should pay close attention to throughout the year.

“Typically, the party that is in the White House loses seats in both houses during the midterms, but we are a long way away from the election and there are a lot of global factors that could change the outcome,” said Brad Thaler, vice president of legislative affairs for NAFCU. “It will be hard to pass legislation prior to 2022 midterms because both parties will be looking for ways to position their party and their agenda for success in the election.” This doesn’t mean that no new oversight will be put into place, he said. “When you can’t legislate, you can advance issues through the regulatory process.”

“We are already seeing issues such as racial equity gaining more oversight, especially as President Biden’s regulatory appointment process hits its stride,” said Greg Mesack, senior vice president of government affairs for NAFCU. “The good news is that credit unions have a great story to tell because they serve minority members, small businesses and borrowers better than banks.”

“We anticipate efforts from Freddie Mac, Fannie Mae, FHA and HUD to look for bias in the mortgage lending space,” said Ann Kossachev, vice president of regulatory affairs for NAFCU. There is a specific focus on bias in the appraisal process, which may not immediately affect credit unions from a regulatory perspective; but it is important to be aware of the issue as the NCUA will likely look into how credit unions review appraisals, she said.

“The Consumer Financial Protection Bureau will also be looking closely at equity in small business loans by requiring financial institutions to submit data if the institution makes more than 25 small business loans in the preceding two calendar years,” said Kossachev. “Credit unions are limited on how many small business loans they can make, but we saw during the pandemic, and with the Paycheck Protection Program, that our members are positioned well to serve a greater number of small, community-

based businesses.” One of the efforts that will continue to be pursued by NAFCU is to work with lawmakers to increase the member business lending cap, she added.

“Credit unions can also expect tougher exams,” said Kossachev. “The appointment of Rohit Chopra does signal a return to regulation by enforcement, as well as a focus on lending practices.” She advised credit unions to be sure that all regulatory requirements for lending are met, including the provision of all loss mitigation options.

Another issue that will be reviewed in 2022 is the result of the pilot project in four locations in and around Washington D.C. and the Bronx, New York that allowed check cashing and bill paying activities at post offices. “The intent of the program is to provide more access for underserved communities, but we’re asking Congress to enable credit unions to add underserved communities to their fields of membership,” said Kossachev. “While the goal is good, use of the post office could pose challenges that include substantial investment in systems and infrastructure to provide services and meet consumer protection as well as privacy and security concerns.” The time required to put infrastructure in place, and the limited services that could be offered might not have an impact in underserved communities, compared to a credit union’s ability to move into an area and have significant impact, she added.

Other issues to watch throughout 2022 include:


A big focus for NAFCU in the coming year will be technology and the use of cryptocurrency and digital assets. The NCUA requested feedback a few months ago about how credit unions can facilitate use of digital assets, said Kossachev. “Credit unions need to facilitate and embrace technology, including artificial intelligence and machine learning, to provide services to members.”
“Our advocacy efforts in 2022 will focus on allowing credit unions to innovate, grow and modernize with investment in technologies that make it easier to serve members,” said Thaler. “Credit unions need to have access to emerging technology that allows them to compete with other financial institutions.” While regulation is a given, Thaler pointed out that “right size regulation that does not give fintechs an unfair, regulatory advantage” is critical if credit unions are going to adopt innovative tools. Furthermore, he noted that unregulated fintechs competing in the financial services space need to be regulated.

Credit Union Tax Exemption

With the passage of bills such as the infrastructure bill, which set unprecedented spending levels, the search for ways to pay for new legislation raises concern about the protection of the credit union tax exemption, said Thaler. “It is important for credit unions not to be hampered by efforts to raise revenue, at the same time proposed regulations may add new costs and burdens to credit union operations,” he said. “We’ll continue to monitor this issue closely.”

Interchange Fees

The ongoing battle about interchange fees will continue into 2022, said Thaler. Retailers continue to demand for regulation of interchange fees for credit and debit card transactions, and the financial industry continues to note the value of the current payments system. The fees cover the financial institutions’ assumption of risk for the “loans” that enable consumers to purchase products from retailers when they may not have the cash and facilitate easier payment to merchants, as well as enhanced security for financial transactions. “We have a concern about efforts to put caps on fees that will place an undue burden on all financial institutions at the same time more data security and privacy protections are needed,” said Thaler.

“We don’t expect significant lawmaking in 2022, and anything that can pass is likely non-controversial,” said Thaler. “Luckily, credit unions enjoy bipartisan support, so everyone needs to continue making lawmakers and their staff aware of the benefits provided by credit unions to members and their communities.”

In addition to paying attention to issues, updates and messages in NAFCU’s federal advocacy center on the website, talking with colleagues and staying up-to-date on legislative issues through other sources, credit unions should stand ready to become part of NAFCU’s grassroots advocacy efforts, says Mesack. “We have a great level of grassroots support with our member credit unions and their members, who are willing to write letters, talk to representatives, and more importantly, vote for those who support credit unions’ mission!”