By Dan Berger
Credit unions, widely recognized by lawmakers and regulators for not creating the financial crisis, continue to strain against a tsunami of regulations unleashed under the Dodd-Frank Act to punish Wall Street’s bad actors. It’s time to provide relief, and the easiest way to do that would be to pull credit unions out from under the regulatory authority of the Consumer Financial Protection Bureau (CFPB) – or, at the very least, to limit the number of CFPB rules applied to credit union operations.
NAFCU has identified a number of areas where some reining in would bring significant relief to credit unions. Here are some of the worst of the CFPB’s contributors to current burdens:
* The use of enforcement action as the sole means of exercising authority over unfair, deceptive and or abusive acts and practices (UDAAP).
* Proposed debt collection requirements in conflict with the Federal Credit Union Act.
* Remittance rule changes that have led to a significant reduction in consumers’ access to remittance services.
* Expanded data collection that raises compliance costs significantly under the Home Mortgage Disclosure Act.
* Regulatory overreach on overdraft
* Proposed payday lending rules that conflict with the payday alternative loan programs approved by the NCUA
* Proposed new restrictions and questionable data collection on arbitration agreements.
A Steadfast Position
NAFCU has been steadfast in its position on the CFPB; it has stood as the only financial industry trade association that opposed placing credit unions under CFPB authority as the Dodd-Frank Act was being written. That position has not changed, and NAFCU holds reducing credit unions’ burdens under rules of the CFPB as one of its top priorities of 2017. To that end, we also continue to advance the need for CFPB to exercise its authority under Section 1022 of the Dodd-Frank Act to exempt credit unions from its regulations.
The need for action is clear.
Approximately 20% of the credit union industry has been lost since the second quarter of 2010, when Dodd-Frank was implemented. Each day, on average, one credit union either closes or is merged out of existence, with the industry today totaling only 5,844 federally-insured credit unions.
Credit unions are subject to numerous consumer provisions under the Federal Credit Union Act, and they receive ample oversight from their prudential regulator, the NCUA. They are also subject to a plethora of regulations from other agencies, including not only the CFPB but also the Department of Justice, Department of Labor, Department of Defense and Financial Crimes Enforcement Network. In short, credit unions more highly regulated than any other type of federally-regulated financial depository institution.
Hurting Everyone
This disproportionate regulatory burden on the credit union industry, which is accelerating consolidation, hurts everyone. When credit unions disappear, there are fewer low-cost options for consumers.
To ensure the future prosperity of our economy and our industry, NAFCU will be unwavering in our efforts to advance CFPB’s rollback of its most onerous regulations.
Dan Berger is president/CEO of NAFCU.