WASHINGTON—The CFPB is making it hard for credit unions to serve their members, and CUs simply need relief from the Bureau's rulemaking, asserted NAFCU and CUNA today in separate letters the trade associations sent to the U.S. Senate Banking Committee in advance of its Wednesday hearing with CFPB Director Richard Cordray on the Bureau’s semiannual report.
NAFCU Vice President of Legislative Affairs Brad Thaler urged the committee to “press the CFPB to provide greater relief to credit unions,” which have been struggling under an “immense” burden since the 2010 enactment of the Dodd-Frank Act.
Thaler also urged the expansion of the CFPB’s exemption efforts to allow all credit unions to be exempt from various CFPB’s rulemakings. Thaler noted that during deliberations on the 2010 Dodd-Frank Act, NAFCU was the only credit union trade association to oppose CFPB having rulemaking authority over credit unions. Thaler emphasized the regulatory burden such rules have imposed and the unique member-owner nature of the credit union industry. He also recommends changing the leadership structure of CFPB from a director to a five-member commission.
Thaler also noted NAFCU’s support for several pending CFPB regulatory relief measures before Congress, including:
- S. 1484, the “Financial Regulatory Improvement Act”;
- S.1711, which would provide a temporary safe harbor for mortgage loan transactions from enforcement of the Real Estate Settlement Procedures Act and Truth in Lending Act integrated disclosure rule;
- S. 482, the “CFPB Examination and Reporting Threshold Act”; and
- H.R. 685, the “Mortgage Choice Act.”
Structural Changes Needed
In CUNA's letter, President and CEO Jim Nussle said that "Despite promises to ‘level the playing field’ between regulated and unregulated financial product and service providers, the impact of nearly every CFPB rule to date has been to make it more difficult and more expensive for credit unions to fully serve their members. In fact, many credit unions have limited or eliminated certain financial products and services traditionally provided to their members as a direct result of the CFPB’s rules. When a CFPB rule or action results in credit unions reducing or abandoning service offerings, consumers have not been protected; they have been stripped of the key market-based consumer protection that is access to credit union services. To put it bluntly: consumers lose when the CFPB keeps credit unions from serving them.”
CUNA noted that credit unions’ regulatory regime, coupled with their cooperative structure, protects credit unions against ever contributing to a financial crisis.
“Five years after enactment, the Bureau has proven unwilling and unable to pursue its mission without significantly and adversely impacting how credit union members receive services from their credit union,” said Nussle. “While we have long supported structural changes to the Bureau, we believe that given the Bureau’s unwavering reluctance to fully exercise its authority to exempt credit unions from its rulemakings, Congress should seriously consider comprehensive structural changes at the Bureau to ensure that it meets its mission without jeopardizing the good work that credit unions do to serve their members.
“We are acutely aware that on Capitol Hill the issues surrounding the Bureau are hyper partisan,” continued Nussle. “What we hope the Committee, the Congress and the Bureau understand is that for credit unions these are not political questions or problems; the actions the Bureau takes have very serious consequences on the provision of financial services to credit union members. Ever increasing regulatory burden is the chief driver of consolidation in the credit union system. If Congress does not step in to fix the problems, it will not only be more difficult for credit unions to serve their members, but there will be fewer credit unions to provide those services.”
CUNA recommended that Congress expand and specify the CFPB’s exemption authority, so the Bureau can go much further than it has to exempt credit unions from its rulemakings. CUNA also pushed for the CFPB to be funded through the appropriations process, which would provide an additional layer of oversight over the CFPB’s activities.
CUNA also asked Congress to pass several pieces of legislation that would provide additional oversight over the CFPB, including:
- Financial Product Safety Commission Act of 2015 (H.R. 1266), which would change the leadership structure at the CFPB to a five-person board, instead of a single director.
- CFPB Examination and Reporting Threshold Act of 2015 (S. 482), which would increase the threshold for examinations of credit unions and banks to $50 billion, from $10 billion.
- Bureau of Consumer Protection Advisory Boards Act (H.R. 1195), which would codify the Credit Union Advisory Council (CUAC) as a legal requirement.
- Helping Expand Lending Practices in Rural Communities Act (H.R. 1259), which would direct the CFPB to establish a proc4ess for determining whether an area should be designated as rural.
- Mortgage Choice Act (H.R. 685), which would exclude from the points and fees calculation affiliated title insurance charges and escrowed homeowners’ insurance premiums;
- Portfolio Lending and Mortgage Access Act (H.R. 1210), which would deem residential real estate mortgage loans made by credit unions and held in portfolio as “qualified mortgages.”
- Consumer Financial Protection Safety and Soundness Improvement Act of 2015 (H.R. 1263), which would authorize the Financial Stability Oversight Council to stay or set aside any regulation of the CFPB upon a determination by a majority of its members that the regulation is inconsistent with safe and sound operations of financial institutions.
- H.R. 2213/S. 1711, which would provide a hold-harmless period through the end of the year following the Oct. 3 effective date of the CFPB’s Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosures regulation.