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FAST Act Regulatory Relief—What You Need to Know
Monday, December 21, 2015 6:45 AM

Credit unions and CUNA saw a victory earlier this month when several regulatory relief provisions were included in the long-term federal highway bill. Now that those three provisions are law, when do they become effective and when should credit unions be prepared to make changes?

The three provisions included in the Fixing America’s Surface Transportation (FAST) Act (H.R. 22) are: modernizing privacy notification requirements; allowing privately insured credit unions to become members of the Federal Home Loan Bank (FHLB) system and directing the Consumer Financial Protection Bureau (CFPB) to establish a process for determining whether an area should be designated as rural.

CUNA’s compliance staff has done a deep dive into those provisions to examine when the changes will take effect, and what credit unions should know.

Privacy notice modernization:

  • The provision does not appear to have a stated date of enactment, which means the general rule of thumb is that the statute takes effect upon the president’s signature;
  • The statute appears to indicate that, as long as your credit union shares nonpublic personal financial information only within the exceptions of the privacy rule, and no changes have been made to your privacy policies, the new exception applies to you; and
  • If your credit union shares information with nonaffiliated third parties in a manner that requires you to allow your members to opt out, you will likely have to continue providing annual notices.

Allowing privately insured credit unions into the FHLB system:

  • The provision does not have a stated effective date, therefore it went into effect upon the president’s signing of the bill; 
  • A credit union will be treated as an insured depository institution for FHLB membership purposes if the appropriate supervisor of the state where the credit union is chartered has determined that the credit union meets the eligibility requirements for federal deposit insurance as of the date of application for membership; and 
  • If the supervisor of the state fails to make a determination within six months of the application date, the credit union will be deemed to have met the eligibility requirements.

Lending practices in rural communities:

  • The provision does not contain a stated effective date, therefore it became effective upon the president’s signature; 
  • However, the provision has a sunset clause which will cause it to expire two years after enactment of the FAST Act---so the provision would expire in early December 2017;
  • The statute amends the CFPB’s process for establishing “rural” areas to provide an appeals process for rural area designations;
  • It also eliminates Truth in Lending Act requirements that lenders prove they "predominately" operate in rural or underserved areas. Lenders will now be required to show only that they operate in the respective rural or underserved area; and
  • The CFPB is required to establish an application process within 90 days after enactment of the FAST Act to permit a person who lives or does business in a state to request that a certain area that had not previously been designated by the CFPB as a rural area to be designated as “rural.”