WASHINGTON—Both NAFCU and CUNA expressed disappointment following CFPB Director Richard Cordray’s comments to the House Financial Services Committee yesterday, suggesting that the CFPB continues to fail to recognize the impact Bureau regulations are having on credit unions and is not doing enough to provide CUs with reg relief.
“NAFCU and our members must challenge CFPB Director Cordray’s assertion that Congress did not intend to grant credit unions a blanket exemption so that is why the Bureau is not doing more to provide relief. Congress gave CFPB authority in Section 1022 to grant exemptions on a rule-by-rule basis," said NAFCU President and CEO Dan Berger. “Unfortunately, the CFPB has failed to exercise this broad legal authority. We believe Congress intended to allow credit unions to be exempted from certain rules.”
Berger said Section 1022 of the Dodd-Frank Act specifically grants the Bureau authority to exempt “any class of covered persons” from any provision or rule issued under Title X, noting that a bipartisan majority of 329 members of the House of Representatives wrote to Cordray urging him to do more in this area.
“Moreover, the assertion that credit unions are not being negatively affected by the tidal wave of overregulation arising from CFPB and Dodd-Frank could not be more wrong,” Berger said. “Director Cordray’s denial that the tide of regulation is not contributing to the continued trend of credit unions being forced to cut back on member services, merge or go out of business flies in the face of facts.”
CUNA president and CEO Jim Nussle said his organization continues to be disappointed in Cordray’s stance on the impact the CFPB’s regulations are having on credit unions.
“He is simply mistaken regarding the legislative history regarding a credit union exemption during the congressional debate surrounding the Dodd-Frank Wall Street Reform and Consumer Protection Act,” Nussle said.
Nussle, too, pointed out that more than three-quarters of the U.S. House of Representatives recently signed the letter calling on the CFPB to use its authority to protect small financial institutions from regulatory burden, “just as Congress provided for in Dodd-Frank,” he said.
“There is no question that the rules the bureau continues to create are negatively impacting the ability of credit unions to provide diverse product and service offerings to their members, and forcing credit unions to exit certain markets,” said Nussle. “We are particularly interested in meeting with Director Cordray and his staff so they can fully understand the $7.2-billion annual regulatory impact we’ve identified in our recent study of credit union compliance costs.”
Nussle added that Cordray “unfortunately seems comfortable with his own narrow set of facts that do not take into account a full understanding of the damage the increasingly complex regulatory burden is having on credit unions.”
NAFCU and CUNA also addressed Cordray’s comments on TRID guidance and payday lending.
“On the matter of the TILA-RESPA integrated mortgage disclosure (TRID) rule, we appreciate Director Cordray’s comments that the CFPB’s hold-harmless period will remain open-ended due to unforeseen information technology problems,” said Berger. “We also welcome his statement that CFPB will provide more guidance on the rule and that the bureau will not take enforcement actions over noncompliance unless there are blatant violations.”
Berger said NAFCU supports Cordray’s statements signifying the Bureau’s intent to ensure the continued availability of PAL loans in its looming payday lending rulemaking. “Many credit unions offer responsible short-term, small-amount loans and financial education resources specially tailored to guide members away from the debt traps of predatory payday lenders.”
On small dollar lending Nussle said CUNA appreciates Cordray’s remarks that the CFPB is trying to make sure there are ample avenues that remain for small-dollar lending to be available to consumers.
“Specifically his statements indicating that credit unions have a product that is worth protecting, and that the CFPB does not want to squash innovation in this area,” said Nussle. “We hope the CFPB’s forthcoming rulemaking in this market actually aligns with these statements, and that credit unions do not face any additional regulatory hurdles to participate in this market.”