Hauptman says NCUA must be aware of consequences of overregulation

NCUA must meet its statutory obligations while being aware that overregulation can stifle innovation and growth, NCUA Chairman Kyle Hauptman told the House Financial Services Committee Tuesday. America’s Credit Unions submitted a letter for the hearing’s record Monday, outlining credit unions’ priorities for the regulator.

“Our regulatory activities must be fair and transparent: for example, we must avoid both the perception and the reality of regulation through enforcement,” Hauptman said.

To right-size the agency’s approach to safety and soundness, Hauptman said NCUA is carefully reviewing its regulations to remove any that are obsolete, overly prescriptive, or unduly burdensome. Notably however, the agency has issued only one proposed rulemaking since Hauptman became the sole member of the NCUA Board in April, calling into question the ability of the Board to act quickly on regulatory relief.

It’s also developing a new strategic plan to guide its priorities through 2030. Feedback received from America’s Credit Unions and others will be used to “ground our planning in main-street priorities,” Hauptman said, adding “our strategic plan will focus on safety and soundness, protecting the Share Insurance Fund from undue risk, and creating space for credit unions to innovate responsibly, especially in leveraging artificial intelligence and cryptocurrencies.”

Rep. Barry Loudermilk, R-Ga., spoke in support of his credit union-backed bill to raise Currency Transaction Report thresholds, and Hauptman said that he hears from credit unions that the “least enjoyed part of running a small institution” is time and resources required for Bank Secrecy Act compliance.

Rep. William Timmons, R-S.C., said he’s heard from stakeholders across his district about ensuring financial institutions are informed and can adapt to the latest digital assets technologies, and asked about the status of the GENIUS Act rulemaking.

Hauptman said it is his intention to work with other financial regulators to meet Congress’ July deadline for a final rule and said he expects the first rulemaking to cover how to apply to be an issuer, “which for credit unions would be credit union service organizations.”

Hauptman’s remarks concerning the timing of GENIUS rulemaking were noticeably ambiguous when compared to FDIC Acting Chairman Travis Hill’s testimony in which he stated that the FDIC expects to issue its first proposed rule this month. America’s Credit Unions has urged the NCUA to work quickly to implement GENIUS and carry out its congressional mandate.

Rep. Young Kim, R-Calif., asked about barriers accessing the Central Liquidity Facility (CLF), and how Congress can ensure access for institutions that need it.  

“We have done everything we can to make applying for our Central Liquidity Facility easier…that said, the reality is most small credit unions do not have access to it, they haven’t gotten around to it for a variety of reasons,” Hauptman said.

America’s Credit Unions supports legislation to codify expired COVID-era CLF flexibility, which was included in the Senate-passed National Defense Authorization Act.  

Rep. Brad Sherman, D-Calif., mentioned a concern America’s Credit Unions has also raised with the NCUA: when it will allow credit union board members to be reimbursed for childcare costs incurred when attending board meetings.

Hauptman noted the idea is “relatively uncontroversial” and agreed when Sherman said he hoped the agency moves quickly on a rulemaking.