John McKechnie, Principal, McKechnie LLC
Now that the bank collapses have subsided (for now) and Congress and the Administration have resolved the debt ceiling showdown, it appears that Congress is moving back to a more business as usual M.O. Here’s what DCUC is on top of in the Nation’s Capital:
News of a tax reform bill percolating always gets the attention of credit union advocates in DC, and when DCUC picked up rumors of House Ways and Means in preliminary stages of drafting legislation, we fanned out on Capitol Hill to make sure credit unions weren’t on the table.
The measure, according to House Republican committee staff, will focus on tax credits and research projects—one staffer involved in the discussions said, “although there is a lot of paper flying around, not hearing credit unions mentioned…chairman Smith (R-MO) see the credit union tax exemption as a third rail not to be touched.”
That’s clearly good news. Two caveats: There are concerns being voiced by House members about credit unions buying banks, and at least one Ways and Means member who is active in the tax bill negotiations has expressed opposition in the past to the credit union tax exempt status. Cause for concern, but not alarm at this stage.
NDAA update: Congress is back on track to begin work on the National Defense Authorization Act (NDAA). Initially scheduled for the markup of the House version in May, the House Armed Services Committee (HASC), along with its Senate counterpart, announced that they were shelving plans to move forward with their bills until after Congress dealt with the debt ceiling.
Following passage of that bill in both chambers, HASC is slated to vote on their bill in Committee in mid-June, and Hill sources point to late July as the Senate timeframe for action. The smart money is still on final action not occurring until after Thanksgiving on this must-pass legislation. And, as always, DCUC (in concert with NAFCU and CUNA) is vigilant regarding any attempt by the bank lobby to force their way onto military facilities rent free. The credit union trades sent a joint letter to HASC in early June laying down a marker on this perennial issue.
CFPB Credit Card Late Fees Regulation Update: Sources on Capitol Hill and at CFPB say a new regulation on credit card late fees is moving through the CFPB rulemaking process, with an eye toward a final rule being issued in the coming months.
CFPB had proposed a rule February 1, 2023, with a comment period ending on May 3. The proposed CFPB regulation would prohibit credit unions and other card issuers from imposing a fee on consumers for late payments unless the card issuer has determined that the dollar amount of the fee is “reasonable and proportional” to the costs. The new CFPB rule may also cap late fees at $8 per occurrence, or mandate that late fee amounts must not exceed 25 per - cent of the required payment.
CFPB will not give a timetable for when they expect to finalize the rule, but it is likely CFPB will be required to conduct a Small Business Review Panel to assess the impact of this rule on small entities. Credit union trades have asked that the proposed rule be postponed until such a panel is convened and an analysis is conducted.