President Donald Trump signing the Economic Growth, Regulatory Relief and Consumer Protection Act into law on May 24, 2018. So, what does this mean for credit unions? The latest expectation from the industry is that the sector will see reduced regulatory requirements. This could be very good news in terms of possibly expanding credit union payment services that could help prevent more small-scale financial organizations from going under in the competitive marketplace.
What Does The Act Say?
The act rolls back the reform that was passed in 2010 by President Obama’s Administration to respond to the financial crisis in 2008 and is likely to primarily impact medium and small financial organizations within the United States. CUNA, the Credit Union National Association, has welcomed this change in legislation, describing it as a “monumental win.” This is because it will increase the asset threshold at which banks face a higher level of regulatory scrutiny, as well as extra capital requirements and stress tests, from $50 billion to $100 billion and it is set to increase even more to $250 billion in 18 months’ time.
The new act reduces the number of banks that face closer scrutiny from 38 down to just 12, and almost every regional bank will now be exempt from the stricter regulations. When it comes to credit unions, this legislation is set to remove the regulatory burden that currently affects the sector significantly, thus allowing credit unions to increase the kinds of mortgages that they can now offer while benefiting from better legal protection, as well as being exempt from several data requirements and disclosure rules.
Benefits For Members
Credit unions are delighted at the prospect of now being able to give their members greater access to loans for real estate purchases, mortgage lending, and a host of other services and products. For example, the bill has exempted credit union residential mortgage loans from specific escrow requirements as long as the credit union has less than $10 billion in assets and has originated less than a thousand mortgages during the previous year.
With regulations swallowing up $1 out of every $6 that credit unions were spending on their operations annually, a total of $6.1 billion per year, it isn’t surprising that many of the small financial institutions struggled to shoulder the burden and went under. However, this switch to a new approach to regulation for credit unions lifts the burden, which is more appropriate for large global-scale banking enterprises and makes these small community organizations more competitive and more able to offer members the services they demand.
Credit Union Payment Services
With the strict regulations now being lifted, the way has been paved for credit unions to offer members a wider range of products to suit their needs. And, with those more extensive services, a more streamlined system of credit union payment services will need to be put in place. This is all good news for the credit unions and their members since the financial institutions will reduce their number of delinquent loans while members will be able to benefit from greater convenience and a greater choice of payment options to suit their lifestyles.
BillingTree’s credit union payment services solutions are ideal for small and mid-sized financial institutions that are looking for ways to improve the efficiency and convenience of their systems. Not only can BillingTree’s payment processing solutions for credit unions increase the amount of revenue received, but they can also improve relationships with members, improve the credit union’s reputation, and increase its reach in the local community while bringing it in line with the needs and demands of modern consumers.