WASHINGTON–America’s Credit Unions has sent separate letters seeking greater clarification around what new “debanking” order actually means, and in response to a social media post by the director of the FHFA suggesting credit unions potentially create “risks.”
While it said it supports the recent Executive Order prohibiting so-called “debanking,” America’s Credit Unions has sent a letter to the Small Business Administration (SBA) asking for additional clarification.
The trade group said credit unions do “not engage in politicized or unlawful debanking and instead make decisions based on objective, risk-based criteria,” but also expressed concerns that statutory field-of-membership restrictions should not be misconstrued as denial of service.
Clarifications Sought
In the letter from America’s Credit Unions Head of Regulatory Advocacy James Akin, the SBA was asked to:
- Clarify what actions constitute politicized or unlawful debanking
- Define how far back lenders must review past actions
- Specify what documentation will satisfy the reporting requirement
- Clarify whether the report is one-time or recurring
- Confirm if past reliance on reputation risk guidance qualifies as good-faith compliance
- Provide supplemental guidance and a standardized reporting template.
Akin also urged coordination with the NCUA and state regulators to align expectations with existing credit union supervision and avoid duplicative burdens, America’s Credit Unions said.
Letter to FHFA
In a separate letter, America’s Credit Unions responded to a recent a social media post from Federal Home Finance Agency (FHFA) Director Bill Pulte in which he stated the FHFA wants to ensure credit unions “are not creating risks that we do not see,”
In its letter, America’s Credit Unions said President/CEO Jim Nussle sought to convey that:
- Credit unions face a “strong and layered” regulatory framework for mortgages lending, with the NCUA, state regulators, and the CFPB for certain credit unions examining credit unions for compliance and safety and soundness
- Credit unions selling mortgages to Fannie Mae and Freddie Mac meet rigorous seller and servicer eligibility requirements, maintain quality control programs, live under representations and warranties, and face repurchase remedies if a loan does not meet standards
- Credit unions do not participate in the risky activities of other entities in the market, including complex capital market activities, relying more heavily on short-term wholesale funding, and expansion into nontraditional mortgage products and investor property concentrations.
Nussle further offered to assist the FHFA in any data gathering to answer specific questions related credit union participation in the Federal Home Loan Bank system, all toward a shared goal of “a housing finance system that is safe, fair, and durable,” according to the trade group.
