CU Trades Weigh In on Senate DoD Authorization ‘Christmas Tree’
Credit union trade groups send letter to Senate outlining position on several issues impacting the industry.
It is a time-worn cliché to say that people shouldn’t watch sausage or legislation being made.
But the process being used to consider the FY23 defense authorization bill demonstrates that it is accurate when it comes to legislation.
When the House passed its version of the defense bill, supporters of various issues loaded it up with unrelated provisions. Many had nothing to do with defense.
The measure, considered must-pass legislation, became the proverbial “Christmas Tree” bill.
Now, as the Senate prepares to consider its version of the bill, credit union trade groups are weighing in on issues they want attached or deleted from the defense bill.
The trade groups this week sent a letter to senators outlining their positions on various issues.
The trade groups urged the Senate to accept a House-passed amendment that would provide a regulatory safe harbor for financial institutions that provide services to marijuana-related businesses.
That proposal has passed the House several times, including in the House version of the defense authorization legislation. But it never has been considered by the Senate. Senate Democratic leaders have said that they want to consider comprehensive marijuana legalization legislation but have acknowledged that bill will not be enacted this year.
In recent weeks, they have said they might agree to a smaller bill that would include cannabis banking.
The trade groups told the Senate that financial institutions are leery of serving marijuana businesses because marijuana remains illegal. As such, credit unions could be open to regulatory sanctions for serving those businesses. As a result, marijuana-related businesses are forced to deal in cash, which creates a public safety hazard.
A regulatory safe harbor would help solve that problem, they said.
The groups also noted they oppose a House provision that would give the NCUA supervisory powers over third-party vendors.
They wrote that the NCUA has exercised effective oversight without that power, rendering the House proposal “a solution in search of a problem.”
“The agency presently has extensive authority to request information regarding CUSOs [Credit Union Service Organizations] from the credit union owners of the CUSO; and the agency has broad authority to adjust the due diligence expectations credit unions must satisfy when engaging third party vendors,” they wrote. “Today, the agency has the authority to obtain necessary information regarding third-parties from the credit unions it supervises.”
They added that they are concerned extending the power to the NCUA would require the agency to increase its budget to hire personnel with the expertise needed to do that job.
“While NCUA has requested this authority for several years, the agency has yet to develop a clear vision of the scope of this authority or how they would implement it,” they wrote.
Central Liquidity Facility
The trade groups also asked the Senate to include language that would make permanent pandemic-related changes to the NCUA’s Central Liquidity Facility. Those provisions, they said, would provide credit unions with access to emergency liquidity in times of crisis.
Finally, the groups asked the Senate to include language that would make it easier for people who have committed minor criminal offenses to gain employment at federally insured credit unions.
The three groups already sent a letter to senators asking them to ignore the kerfuffle over credit unions receiving free rent on military bases. Banks have long sought the free rent benefits, but the Defense Department recently said in a report that servicemembers have easy access to financial services without extending the benefit to banks.