WASHINGTON (7/28/14)--The House Financial Services Committee will begin a markup of the Regulation D Study Act (H.R. 3240) Tuesday, a bill supported by the Credit Union National Association.
The bill, introduced by Rep. Robert Pittenger (R-N.C.), requires the Government Accountability Office (GAO), in consultation with credit unions and community banks, to study the Federal Reserve's Regulation D minimum reserve requirements.
The bill calls for the study to report:
- A review of how the Fed has used reserve requirements to conduct U.S. monetary policy;
- The impact of the maintenance of reserves on depository institutions;
- The impact upon consumers in managing their accounts; and
- Alternatives available to the Federal Reserve Board to maintain reserves to effect monetary policy.
Regulation D affects credit union members by limiting the number of automatic withdrawals from a member's savings account to six per month. This can cause members to overdraw checking accounts when a debit draws the account balance below $0 and the number of transfers for the month has already happened. Members who might have the funds in a savings account are unable to automatically transfer the funds, which could lead to a nonsufficient funds fee.
"We would like to see this cap increased or eliminated altogether, but we understand that one of the reasons the regulation is in place is because the Federal Reserve uses it as a tool to conduct monetary policy," said Doug Fecher, president/CEO of Wright-Patt CU, Beavercreek, Ohio, with $2.8 billion in assets, on behalf of CUNA to the House Financial Services Committee earlier this month.
CUNA's testimony referenced a quote from former Fed Chair Ben Bernanke, who said reserve balances far exceed requirements, and play only a "minor role" in the daily implementation of modern monetary policy.
"A GAO study will allow an objective assessment of whether the rarely changed monetary reserves imposed on depository institutions and consumers are necessary in order for the Fed to implement monetary policy in the 21st century," Fecher said.
The committee will also mark up another bill CUNA testified in support of--the Access to Affordable Mortgages Act of 2014 (H.R. 5148). The bill would amend legislation including the Truth in Lending Act to provide regulatory relief to institutions originating mortgages of $250,000 or less from appraisal requirements listed in the Dodd-Frank Act.
"The bill would provide both regulatory relief to mortgage lenders as well as increase access to mortgage credit availability for borrowers purchasing lower cost dwellings," Fecher said. "The bill would allow credit unions that offer mortgage loans secured by covered properties to better serve their middle to lower income members."
The markup is scheduled to begin at 10 a.m. (ET) Tuesday in the Rayburn House Office Building.