House Member Proposes Expansion of NCUA Board Posted by AVCU on 9:52 AM

As reported in CU Times, House Financial Services Committee Chairman Jeb Hensarling (R-Texas)  is proposing a plan to expand the NCUA board from three to five members under a sweeping financial regulatory overhaul plan.  Hensarling outlined his plan last week and Republican leaders in the House endorsed it on Tuesday.  The plan does not contain a rationale for increasing the size of the board, but there is precedent for such action.

In reauthorizing the Surface Transportation Board, which regulates the railroad industry, Congress last year expanded the board from three to five members, stating a three-member board is cumbersome because when two members had a conversation, it constituted a quorum and violated federal open meetings laws. Some opinie that the plan potentially impacts NCUA’s budget and fees that credit unions pay through operating fee assessments.

The broad Hensarling proposal would essentially repeal the Dodd-Frank Act and replace it with a new regime that includes a plan that would require Congress to approve any significant financial regulation. The legislation contains a laundry list of regulatory changes that Republicans have pushed during the past several years. Many of those have been contained in legislation that has not been enacted. The plan incorporates several specific House bills into the overarching legislation.

It is unlikely that the House and Senate will have the time and desire to enact such sweeping legislation this year. But the Hensarling plan may serve as a marker for action next year.

Other features of the plan:

• It would require the NCUA to provide a rationale for any funds the board proposes to use from the Share Insurance Fund. 
• The agency’s budget would be required to contain a report detailing the NCUA’s overhead transfer rate and provide a rationale for any proposed use of funds.
• It would establish a Credit Union Advisory Council to consult with the NCUA on how federal laws and regulations affect credit unions.
• Incorporates a proposal to codify a plan to allow certain well-capitalized credit unions to have an 18-month exam cycle. The NCUA already has the power to change the exam cycle and Metsger has said he would like that authority to remain in the board’s hands rather than specified in law.
• Allows states and tribes to request an unconditional five-year waiver from the CFPB for short-term, small dollar credit.
• Repeal the CFPB’s authority to prohibit arbitration clauses in financial services contracts and repeal the so-called Durbin Amendment on debit interchange fees.
• Require any major financial regulations to be approved by Congress before they become effective.