The Credit Union National Association seeks further discussion with the Consumer Financial Protection Bureau regarding the burden it says the bureau’s regulations are having on nonprofit, member-directed credit unions, according to a recent news release on CUNA’s website.
Jim Nussle, president/CEO of CUNA, voiced those concerns in a letter to CFPB Director Richard Cordray. Nussle said its regulatory burden study, released in February 2016, shows the financial impact on credit unions has increased by 40% since 2010. That’s when the creation of the CFPB was authorized by the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act, legislation adopted after the financial crisis of 2007–08.
Conducted by Cornerstone Advisors, CUNA’s study found the regulatory burden diverted $7.2 billion from services in 2014. Nussle said in the news release the study showed smaller credit unions bear the biggest brunt. For three quarters of credit unions with assets below $100 million, regulatory costs rose from .78% of assets in 2010 to 1.12% of assets in 2014, an increase of 43%, according to the study.
Cordray addressed the 2016 CUNA Governmental Affairs Conference Feb. 23, saying “We know credit unions were not the culprit in the (financial) crisis,” of 2008.
“Credit unions did not underwrite bad loans that sank the housing market,” he said in the speech. “You upheld sound underwriting standards to protect consumers, even as it cost you customers.”
However, Cordray noted that “many credit unions have focused on the compliance burden,” while overlooking “the positive benefits of the rules.” One benefit, he said, is credit unions thrive when the “bad practices are routed out.”
Cordray said in the speech that since new rules were instituted “the share of mortgage lending by credit unions is growing.”
In his written online response to Cordray, Nussle said, “There is no question that the rules the bureau continues to create are negatively impacting the ability of credit unions to provide diverse product and service offerings to their members, and forcing credit unions to exit certain markets.
“We are particularly interested in meeting with Director Cordray and his staff so they can fully understand the $7.2 billion annual regulatory impact we’ve identified in our recent study of credit union compliance costs.”
To read the full report of the CUNA survey, see www,cuna.org/regburden.