Fed Drops Three Pending Reg Z Rules (Misc News: February 2, 2011)
The Federal Reserve Board said Tuesday that it does not expect to finalize three pending rules under Regulation Z aimed at implementing the Truth in Lending Act prior to the transfer of authority for such rules to the Consumer Financial Protection Bureau.
MCUL & Affiliates CEO David Adams said the announcement is a win for the credit union movement.
“This decision by the Fed is a huge victory for the organized credit union movement,” Adams said. “We're fighting against an onslaught of strangling, cost-inducing regulations. Our grassroots lobbying has once again paid off. We've had some legislative and regulatory setbacks during the economic crisis. But we've also had many victories as we've preserved our tax status, beat back mortgage cram downs twice, defeated efforts to extend CRA to credit unions, gained exemptions for most credit unions from the debit interchange pricing and CFPB provisions.”
A key provision in one of the now-dropped Reg Z proposals would have jeopardized credit protection products, such as credit life, disability and related products. The other proposals addressed closed-end mortgage loans and home equity lines of credit under the Truth in Lending Act (TILA).
“Although there are specific provisions of these board proposals that would not be affected by the CFPB's development of joint TILA-RESPA disclosures, adopting those portions of the board's proposals in a piecemeal fashion would be of limited benefit, and the issuance of multiple rules with different implementation periods would create compliance difficulties,” the Fed said in a news release. Click here to read the Fed's release.
CUNA President/CEO Bill Cheney had asked the Fed to drop these proposals and impose a moratorium on any further rulemakings on issues that will be under the authority of the Consumer Financial Protection Bureau as of July 21.
"We're gratified the Federal Reserve listened to the voices of credit unions, Leagues and CUNA," Cheney said.
In fact, CUNA said that its efforts in conjunction with the state leagues generated 4,000 comment letters to the Fed on the proposals. The Fed said it received more than 5,000 letters with the balance presumably coming from bank officials.
“I am pleased about this announcement which CUNA worked to pursue but also want you to know how important your comment letters on these issues were in helping to persuade the Fed to back off on these proposals,” Cheney said in e-mail to leaders in the credit union movement.
Because the CFPB will assume rulemaking authority under Reg Z and 17 other consumer protection rules in July, these issues could resurface. CUNA and the MCUL will closely monitor developments at the CFPB.
Adams said that while the Reg Z victories were great, the credit union movement still hass more to do protect against other threats.
“Now we must continue to turn up the heat on the Fed's proposed debit card interchange rule and the NCUA's recently proposed regulations,” he said.