‘True lender’ rule, NCUA vendor authority, CCyB among topics slated for regulatory oversight hearing Wednesday

Measures that would repeal the “true lender” rule for banks, restore the federal credit union regulator’s short-lived, direct authority over third-party vendors, and set a trigger for the countercyclical capital buffer (CCyB) for banks are on the agenda for Wednesday’s oversight hearing of the House Financial Services Committee featuring testimony from industry regulators.

The bills also address credit union membership, a proposed study focusing on newly chartered institutions, bank and credit union employment of previously incarcerated individuals, and more.

The May 19 hearing, slated for 10 a.m. ET, will be held virtually. Witnesses slated to participate include Todd Harper, chairman of the National Credit Union Administration (NCUA) Board; Michael Hsu, acting comptroller of the currency, Office of the Comptroller of the Currency (OCC); Jelena McWilliams, chairman of the Federal Deposit Insurance Corp. (FDIC); and Randal Quarles, vice chair for supervision of the Federal Reserve Board.

The committee will be looking to hear from regulators on a wide range of regulatory and supervisory issues, including steps taken that have eased regulatory requirements for financial institutions and expanded the availability of liquidity amid the COVID-19 pandemic.

The hearing will also address nine legislative measures – eight yet to be assigned bill numbers, as they are listed in the hearing notice – that are described briefly in a committee memorandum:

  • H.J. Res. 35, “Resolution of Disapproval on the OCC’s National Banks and Federal Savings Associations as Lenders Final Rule (C. Garcia). This bill, which is identical to Senate-passed S. J.Res. 15, would nullify what the committee describes as the OCC’s “problematic final ‘True Lender’ rule” on bank partnerships.
  • “Central Liquidity Facility Enhancement Act,” which would permanently extend enhancements for NCUA’s Central Liquidity Facility (CLF) made in the CARES Act.
  • “Countercyclical Capital Buffer Act,” which would require the Fed to activate the countercyclical capital buffer (CCyB) for the largest banks upon the Federal Open Market Committee (FOMC) increasing interest rates.
  • “Diversity in Financial Regulatory Advisory Committees Act,” which would require reporting of advisory committee demographics and the consideration of at least one gender and racially or ethnically diverse individual when filling advisory committee vacancies at certain financial regulatory agencies.
  • “Expanding Financial Access for Underserved Communities Act,” which would, among other things, allow credit unions to expand their field of membership to include underserved communities that lack a depository institution branch within 10 miles.
  • “Expanding Opportunities in Banking Act,” which would expand employment opportunities at banks and credit unions for certain formerly incarcerated individuals.
  • “Federal Reserve Bank Board Diversity Act,” which would require the consideration of at least one individual reflective of gender diversity and one individual reflective of racial or ethnic diversity when filling Federal Reserve bank board of directors’ vacancies.
  • “NCUA Oversight of Third Party Vendors Act,” which would reauthorize and make permanent authority the NCUA temporarily had between 1998 and 2002 over credit union third-party vendors from between 1998 and 2002, similar to permanent authority bank regulators have pursuant to the Bank Service Company Act.
  • “Promoting New and Diverse Depository Institutions Act,” which would require the Fed, OCC, FDIC, NCUA, and CFPB, in consultation with the Treasury Secretary, to conduct an 18 month study about challenges prospective de novo depository institutions face, and to develop a strategic plan to promote the creation of newly chartered depository institutions, particularly MDIs and CDFIs, in a manner that promotes, among other things, safety and soundness, consumer protection, and community reinvestment.

The hearing will be webcast live.

May 19 oversight hearing notice

Committee memorandum