CUNA wrote a letter to the U.S. House Financial Services subcommittee on oversight and investigations March 21 regarding its concerns over the CFPB’s current structure. The letter states that credit unions have been subjected to more than 200 regulatory changes from more than a dozen federal agencies since the beginning of the financial crisis of 2008, according to a blog article posted on the CUNA website.
“This has led to rising costs and fewer choices for credit union members, an unfortunate result since these regulatory changes were intended to address bad behavior credit unions never engaged in,” the letter states. “Furthermore, disparity in the cost impact of regulatory burden has accelerated the consolidation of the credit union system (and the banking sector), robbing consumers of financial institution choices.”
Rising costs and increased burdens have forced credit unions to cut back or cease offering services and products such as international remittances, mortgages, home equity lines of credit and to reevaluate whether they can comply with new proposals for short-term, small-dollar loans, according to the CUNA blog article.
“It has created a rigged system in favor of the behemoth banks who can afford to spread the cost of compliance with one-size-fits-all regulation over large economies of scale,” CUNA wrote in its letter to the committee.
CUNA urged Congress to consider a number of structural reforms to the CFPB, including:
• Modernize bureau leadership to include a multi-member commission. CUNA believes the current leadership structure led by a single director is “not working for credit unions” and a commission would ensure diverse perspectives are brought into the rulemaking processes;
• Fund the CFPB through the appropriations process, adding a level of oversight that would force the bureau to prioritize problem areas;
• Clarify the agency’s exemption authority under section 1022 of the Dodd-Frank Act;
• Establish safeguards to prevent CFPB abuse of its Unfair, Deceptive and Abusive Actions and Practices authority; and
• Raise the CFPB’s supervisory threshold for credit unions and banks from its current level of $10 billion in assets to those with more than $50 billion in assets.
To learn more about the CFPB letter, click here.
See related article on community bank and credit union trade groups call for a bipartisan CFPB commission.