WASHINGTON—America’s Credit Unions has sent three letters to Capitol Hill addressing, respectively, a central bank digital currency, issues with the CFPB, and efforts to encourage homeownership.
In the first letter to Congress, ACU President/CEO Jim Nussle said a central bank digital currency (CBDC) could negatively affect credit unions and pose broader financial security risks.
The letter was sent to House Majority Whip Tom Emmer (R-MN) and Sen. Ted Cruz (R-TX), who have introduced legislation (S.3801/H.R. 5403) that would bar the Federal Reserve from issuing a CBDC.
“If the Federal Reserve were to offer a CBDC directly to consumers, it would be in essence offering consumer accounts, which would constitute a massive expansion of its mission and threaten to erode the financial system,” wrote Nussle. “We expect that the net costs of a CBDC will exceed the benefits, and that administration of a CBDC will distract from the Federal Reserve’s dual mandate of achieving both stable prices and maximum sustainable employment.”
‘Impossible to Anticipate’
America’s Credit Unions said it believes that because the underlying regulations for a CBDC have not yet been developed and properly vetted, it is impossible to anticipate the privacy concerns and other trade-offs that might come from a CBDC.
Letter Sent on CFPB
Separately, Nussle wrote to a House Financial Services subcommittee ahead of its hearing on CFPB transparency, saying the Bureau’s structure and several recent actions have the trade group concerned,
“[G]iven the broad authority and awesome responsibility vested in the CFPB, a five-person commission has distinct consumer benefits over a single director,” Nussle stated. “Regardless of how qualified one person may be, including the current leadership of the agency, a commission would allow multiple perspectives and robust discussion of consumer protection issues throughout the decision-making process.
“We believe the Bureau currently lacks sufficient accountability and transparency mechanisms as it relates to its funding, which further exacerbates the challenges in assessing its financial and operational performance,” Nussle continued. “As such a large agency overseeing all aspects of the financial sector, we believe that the Bureau’s funding should be overseen and established by Congress.”
Other Objections Raised
Nussle also argued the “non-transparent structure leads to problematic” CFPB rulemakings, stating the CFPB’s:
- Final rule on credit card fees “demonstrates a lack of understanding as to how consumers and financial institutions utilize credit services,” and America’s Credit Unions supports efforts to nullify the rule via the Congressional Review Act
- Initiative to label standard fees as “junk fees” will “result in credit unions no longer being able to offer value-based services and products to vulnerable communities.”
- Proposed overdraft rule “inadvertently undermines the ability of smaller financial institutions like credit unions from offering overdraft protection programs
- Rulemaking on small business data collection “threatens to harm both small businesses and small financial institutions.”
- Section 1033 rulemaking contributes “significant uncertainty” about the fraud vulnerabilities of new data sharing mechanisms
How CUs Can Boost Homeownership
In its third letter, America’s Credit Unions outlined several ways it said Congress can support credit unions’ efforts to encourage homeownership.
The letter was sent to the Senate Banking Subcommittee on Housing, Transportation and Community Development.
“One of the most important things that Congress could do to promote financial inclusion and ensure that access to financial services is equitable would be to ensure that Federal law permits all Federal credit unions to serve underserved areas,” wrote Nussle.
Under current law, only multiple common bond credit unions are eligible to add underserved areas to their field of membership, ACU noted.
Lift the Restriction
“If the policy goal is to ensure that all have access to affordable financial services, then the policy should not restrict a subset of member-owned, not-for-profit financial institutions from providing service to these communities,” added Nussle.
In addition, Nussle stated Congress should continue to support important programs that facilitate a credit union’s ability to improve their members’ financial well-being, such as the Community Development Financial Institution Fund and the Community Development Revolving Loan Fund.
A Final Note
Finally, Nussle explained that government policy can impact affordability, noting several opportunities where the Federal Housing Finance Agency could enhance their policies to increase homeownership.
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