2024: A Year of Change for the Credit Union Community
Major changes are already happening in January
From the Democratic takeover of the National Credit Union Administration board to the merger of the two national trade groups on January 1, credit unions already face a changing environment this coming year.
The biggest change for credit unions in 2024 may come from the changes at the NCUA. Shortly before leaving for the year, the Senate confirmed Tanya Otsuka for a seat on the NCUA board, replacing Rodney Hood, whose term has expired. Otsuka’s confirmation is particularly significant since once she is sworn in, Democrats will have the majority on the board. It will leave Kyle Hauptman as the lone Republican on the panel. This shift may change NCUA policies.
With Democratic control of the board, Chairman Todd Harper may finally be able to implement priority items that had attracted opposition from his Republican colleagues. Harper has pushed the board to place a higher priority on consumer protection examinations at credit unions, while GOP members have opposed this, saying the agency places enough emphasis on consumer protection. Otsuka may see things Harper’s way, giving him the additional vote he needs to change the priorities.
In addition, Otsuka may give Harper the vote he needs to have the NCUA issue guidance on climate-related issues. Several other financial regulators are developing such guidance, but the Republicans on the NCUA board have said that the agency should not tell credit unions to consider climate change when making financial decisions. Otsuka may shift the balance of power on this issue.
Another big, immediate change is the merger of the Credit Union National Association and the National Association of Federally-Insured Credit Unions. The merger became effective on Monday, with CUNA President/CEO Jim Nussle taking the helm of the organization. Credit unions will be getting government information from a new organization designed to give the industry an efficient and cost-effective voice.
On the legislative front, the new group’s chief advocacy officer, Carrie Hunt, is a familiar face on Capitol Hill. Before joining the Virginia Credit Union League as its president/CEO, Hunt served as executive vice president of government affairs and general counsel at NAFCU.
The regime and focus at the Consumer Financial Protection Bureau likely is to remain constant, which means the changes it was pursuing in 2023 will likely mean change for financial institutions in 2024.
In 2024 the CFPB is widely expected to issue a proposed rule governing overdraft fees and it could issue a final rule limiting credit card late fees. In addition, the comment period on the agency’s proposed personal financial data rule closed on December 29. That proposal is intended to give consumers more control over their financial data and it is designed to make it easier for consumers to change their financial services provider. That rule, or variations, will probably be considered this coming year.
With the 2024 presidential election looming, CFPB Director Rohit Chopra may be concerned he is facing a time crunch. If a Republican wins the presidential race, Chopra is likely to be out of a job in 2025, so he may encourage the agency to get his priorities implemented in 2024 before the election.
Another possible big change is that the CFPB’s existence and policies could be in jeopardy even sooner than Chopra’s. The U.S. Supreme Court is likely to issue its decision on the agency’s funding mechanism in June 2024. The Consumer Financial Services Association of America has challenged the CFPB’s funding mechanism, contending that it is unconstitutional since the CFPB is not subject to the annual appropriations process. Instead, the CFPB is funded by the Federal Reserve. If the Supreme Court rules that the funding structure is unconstitutional, it could call into question all the agency’s rules and enforcement actions since the bureau was established in the Dodd-Frank Act. This, obviously, would impact financial institutions in unpredictable ways.
Finally, the 2024 election may make changes that will have unpredictable results for financial institutions in 2025. In addition to the presidential contest, which will determine Chopra’s fate, Senate Banking Committee Chairman Sen. Sherrod Brown, D-Ohio, is running for reelection, in one of the key races that could determine partisan control of the Senate.
Brown can be expected to continue to push a consumer protection agenda this year, in an effort to burnish his image as a champion of the working class. Whether he is returned to the Senate and whether he remains in charge of the Senate Banking Committee will have implications for the policies that will come out of that committee and the impact on credit unions specifically and financial institutions generally during the next Congress.
House Financial Services Chairman Rep. Patrick McHenry, R-N.C., is retiring, so the chairmanship of that panel is uncertain if Republicans maintain control of the House. What this ultimately means is that the changes during the 2024 election will impact financial institutions in 2025.
In summary, a lot of changes will be occurring in 2024 that will impact the credit union community. Democrats are about to control the NCUA and policies may change there. Chopra will be moving his agenda at the CFPB, while a major Supreme Court decision could find the CFPB’s existence unconstitutional. The old credit union trade organizations have merged into one and will be making lobbying and campaign contribution decisions while the 2024 elections will have major consequences for the policies that impact all financial institutions.
Check back here often for news - it is going to be a busy year!