WASHINGTON—NAFCU has written to the Senate Banking, Housing, and Urban Affairs Committee ahead of its hearing on the CFPB's Semi-Annual Report to Congress at which Director Rohit Chopra as witness.
As CUToday.info reported earlier, the CFPB will be the subject of hearings in both the House and Senate this week.
In the letter, Vice President of Legislative Affairs Brad Thaler shared NAFCU’s support for the Committee’s oversight of the Bureau, while outlining several key areas of concern with CFPB policies that are pertinent to the credit union industry.
Focusing first on Small Entity Exemption Authority, Thaler noted that the CFPB should utilize its statutory exemption authority under Section 1022 of the Dodd-Frank Act to recognize the unique nature of and constraints faced by the credit union industry. Although the CFPB has provided past exemptions based on an entity’s asset size, such as the qualified mortgage (QM) and Home Mortgage Disclosure Act (HMDA) rule’s small entity exemption, the CFPB could do more to recognize that not all financial institutions operate the same way, by tailoring its regulations to provide exemptive relief based on those differences, Thaler stated.
Caution Shared
Additionally, Thaler pointed to NAFCU’s stance on the CFPB’s recent Request for Information (RFI) on fees, noting that the association and our member credit unions are “happy to work with the CFPB to improve consumers’ understanding of financial products and services, but caution that increasing the amount of required disclosures or mandating that contingent fees be included in a lump-sum price would only further confuse and frustrate consumers that may have varying demands for convenience.”
In regard to the CFPB’s definition of Unfair, Deceptive, or Abusive Acts and Practices (UDAAP), Thaler explained that credit unions are devoting more resources than ever to UDAAP compliance due to unclear standards and the unpredictability of enforcement.
“The CFPB should consider a UDAAP rulemaking to enhance transparency and accountability and provide the financial services industry with some predictability regarding this amorphous standard,” added Thaler.
In addition, Thaler noted in the letter NAFCU’s concerns with the CFPB’s proposed rule for section 1071 of the Dodd-Frank Act, citing the rule’s complexity and ongoing compliance costs that will disproportionally impact credit unions and hinder their ability to provide financial services for small businesses. “The likely net effect of the Proposed Rule’s expansive coverage and intensive data collection and reporting requirements is that credit unions will quickly become uncompetitive and may be forced out of small business lending altogether,” stated Thaler.
Other Recommendations
Thaler also noted several additional areas of concern with CFPB-related policy and rulemaking, and urged the Bureau to:
- Better coordinate between the CFPB and NCUA examiners to limit exam burden and streamline processes and procedures
- Adopt more flexible rules on the acceptance and delivery of electronic signatures and disclosures under the Electronic Signatures in Global and National Commerce Act (E-SIGN)
- Use the CFPB’s authority under the Dodd-Frank Act to oversee a grossly under-regulated industry of fintech companies that offer consumers a wide array of products and services digitally
- Ensure error resolution responsibilities under the Electronic Funds Transfer Act (Regulation E) are fairly balanced for credit unions and third-party payment system operators
- Support legislation to move the leadership of the Bureau to a five-person commission agency structure to allow multiple perspectives and robust discussion of consumer protection issues throughout the decision-making process.
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