ALEXANDRIA, Va. – NCUA Chairman J. Mark McWatters has written to Consumer Financial Protection Bureau Director Richard Cordray to request the CFPB provide a conditional exemption for credit unions with assets of more than $10 billion from its examination and enforcement authority.
The letter cites credit unions’ “unique role” in the financial system by virtue of their being not-for-profit institutions owned and controlled by members, with McWatters saying that shifting examination and enforcement authority to NCUA offers numerous benefits from the current system, in which credit unions face unnecessary examination burdens and aggressive punitive fines.
“Subjecting federally insured credit unions and their consumer/member owners to the dual examination—and, in the case of federally insured, state-chartered credit unions, triple examination—regime mandated under Section 1025 of the Consumer Financial Protection Act imposes unnecessarily burdensome costs, particularly given their positive, consumer-focused role,” McWatters wrote. “I believe the CFPB and the NCUA can and should work together. As the prudential regulator of federally insured credit unions, the NCUA possesses a broader arsenal of enforcement tools than is available to the CFPB, allowing the agency to take more targeted actions to protect consumers and address consumer financial protection law violations.”
NcWatters said this requested change would not affect CFPB’s exclusive rulemaking authority over federally insured credit unions, and the bureau would still be able to take enforcement action if it determined NCUA was not adequately enforcing consumer protection laws.
NCUA noted that Section 1025 of the Consumer Financial Protection Act of 2010 gives CFPB primary enforcement authority for consumer financial protection law over insured depository institutions with assets of more than $10 billion. Six federally insured credit unions—Navy Federal Credit Union, State Employees’ Credit Union, Pentagon Federal Credit Union, Boeing Employees Credit Union, SchoolsFirst Federal Credit Union, and The Golden 1 Credit Union—have assets of $10 billion or more.
McWatters said shifting this authority would free up CFPB’s examination and enforcement resources to focus on larger investor-owned, for-profit institutions while continuing to provide consumer protections for credit union members.
“I believe granting federally insured credit unions an exemption from Section 1025 will help ensure they are treated fairly and equitably while also maintaining consumer protections and a level playing field for all parties involved,” McWatters said in the letter.
A full copy of the letter can be found here here.
NAFCU, which previously sent McWatters its list of regulatory priorities for 2017 that included exempting all credit unions from the CFPB, thanked McWatters for Thursday's letter.
"NAFCU – from the Bureau's inception – was against the CFPB having direct oversight over credit unions and was the only financial services trade association to take that stance," said NAFCU President and CEO Dan Berger. "NAFCU and its members thank Chairman McWatters for making this request directly to Director Cordray."