ARLINGTON, Va.–The pessimism among senior leaders at credit unions revealed in a new survey from NAFCU is most likely due to a change in leadership at the CFPB, according to one NAFCU exec.
As CUToday.info reported here, NAFCU’s latest Credit Union Sentiment Index (CUSI), an index based on NAFCU member responses to eight questions on growth and earnings outlook, lending conditions and regulatory burden, continued to decline in December following a sharp drop in the previous month. The index is now sitting on the threshold of dropping into the "pessimistic" range, NAFCU said.
Credit unions' outlook on regulation over the next 12 months fell to its lowest reading in the history of the survey, NAFCU reported.
But the survey was conducted at the same time there has also been a change in leadership at the Consumer Financial Protection Bureau, and that’s the likely culprit behind credit unions’ working the worry beads, according to Carrie Hunt, EVP and general counsel with NAFCU.
As CUToday.info reported here, new Acting CFPB Director Dave Ueilo has indicated the Bureau will be aggressive in a number of areas.
Likely Not a Reflection of NCUA
“(The pessimism is a reflection) of the change in leadership at the CFPB where the acting director has said he plans to reverse” much of the direction under previous directors Kathleen Kraninger and Mick Mulvaney, said Hunt. Under the two prior Trump administration appointees, the Bureau largely dialed back its aggressiveness.
For credit unions, which “weren’t the cause of the financial crisis” that led to the creation of the CFPB, reminded Hunt, a more aggressive Bureau is just another layer of compliance with which to deal.
NCUA has also seen a change in leadership with a new chairman, Todd Harper, but Hunt said she doesn’t believe that played a role in how credit union leaders feel about what’s ahead.
“With NCUA it’s still too early to tell,” said Hunt “Rodney Hood and Kyle Hauptman remain on the board, so it’s a little different.”
NCUSIF Report
Meanwhile, as CUToday.info also reported, NAFCU has released an updated analysis of the National Credit Union Share Insurance Fund (NCUSIF). The trade group said it believes the fund entered the COVID-19 pandemic in a strong position and expects the equity ratio will remain under “moderate stress,” but there is no need for a premium, according to NAFCU.
But how much attention does NCUA actually pay to such reports?
“They certainly look at it and take it into consideration,” said Hunt “Of course, NCUA is both a safety and soundness regulator and also a functional regulator. It’s been my experience they place the interests of the NCUSIF above everything else. As a trade association our interest is in ensuring credit unions can continue to operate.”
The result of that, said Hunt, is often a conflict as the agency is quite risk adverse, which NAFCU has sought to “dial down.”
“Yes they are receptive,” said Hunt, but that receptivity often isn’t enough to overcome the innate conservative nature of the agency.