ARLINGTON, Va.—NAFCU President and CEO Dan Berger urged CFPB Director Richard Cordray to use the bureau’s exemption authority provided in the Dodd-Frank Act to exempt credit unions from the upcoming payday lending rulemaking.
Berger reiterated that Section 1022 of the Dodd-Frank Act gives CFPB broad authority to grant exemptions on a rule-by-rule basis. He also noted that Cordray had called credit union payday alternative loans (PALs) a “good product” during his testimony before the Senate Banking Committee last week.
“NAFCU and our member credit unions support the CFPB’s goal of protecting consumers from the dire financial consequences that often result from becoming entangled with predatory payday lending,” Berger wrote. “To ensure the continued existence of credit unions as a viable alternative to predatory payday lenders, NAFCU recommends the Bureau apply its Section 1022 exemption authority to credit unions conducting short-term, small-amount loans in accordance with current state or federal laws, such as the PAL loan program.”
Berger also urged Cordray to keep its exemption authority in mind when drafting future regulations, to limit the regulatory burden on credit unions. He emphasized that subjecting credit unions to rules aimed at bad actors only hinders credit unions’ ability to serve their members.