CUNA will endorse House Financial Services Chairman JebHensarling's (R-Texas) efforts to create a path forwell-capitalized credit unions to be exempt from capital orliquidity requirements, according to testimony President/CEO Jim Nussle plans to present to thecommittee Tuesday.

Nussle will testify before the committee on one section ofHensarling's legislation to overhaul the Dodd-Frank Act.

Nussle said about 65% of credit unions would be eligible forregulatory relief, under the bill, which sets 10% as the assetlevel needed for the relief. Those credit unions hold about 62% ofassets, serving nearly 60% of all credit union members.

“It ensuresthe continued safety and soundness of the credit union, while atthe same time removes barriers that keep credit unions from doingeven more for their members,” he said in his statement.

In his testimony, Nussle said that credit unions effectivelyserved members during the financial crisis.

“Recent history clearly demonstrates that credit unions wereable to continue lending during the recent financial crisis, whileother financial institutions failed or had to curtail operationsdue to damaged balance sheets caused by their less risk-aversepractices in the run-up to the crisis,” he said.

He said that increased regulatory burden is the leading cause ofcredit union consolidation, adding that a CUNA-commissioned studyshowed that the annual cost of regulation was $7.2 billion in 2014,compared to $4.4 billion in 2010.

“While the top-line data show a healthy, strong andgrowing credit union sector, credit unions are hiring morecompliance officers than loan officers,” he said.

For its part, NAFCU termed the 10% provision as a novel approachthat merits more examination.

“NAFCU believes that this proposal deserves careful and thoroughexamination to ensure the capital requirements in the 'off-ramp'can work for various types of institutions, including whether onelevel fits all types of institutions, or if 10% is the proper levelfor credit unions,” NAFCU Executive Vice President/General CounselCarrie R. Hunt wrote in a letter to the committee.

In his testimony, Nussle said that CUNA is still examining theremaining parts of Hensarling's bill, is likely to support manyprovisions, but has concerns about a few. He said CUNA plans toconvey those positions to the panel when it is finished examiningthe legislation.

The bill contains – among other things – proposals to create an18-month exam cycle for some credit unions, convert the CFPB'sleadership into a commission and repeal the Volcker rule.

The proposal would essentially repeal the Dodd-Frank Act andreplace it with a new regime that includes a plan that wouldrequire Congress to approve any significant financialregulation.

The plan would also put all financial regulatory agencies on abudget.

The legislation contains a myriad of regulatory changes thatRepublicans have pushed during the past several years. The bill isunlikely to become law this year since Congress probably will notconsider such sweeping legislation before leaving town tocampaign.