Earlier this month, the Consumer Financial Protection Bureau (CFPB) issued an advisory opinion claiming large financial institutions cannot charge certain legal fees. Once again, the bureau side-stepped the Administrative Procedure Act (APA), avoided stakeholder input, and forced down a major policy change painted as mere “guidance.” The APA exists for a reason – to ensure that independent federal agencies, including the CFPB, adhere to a consistent, transparent rulemaking process that protects Americans from regulatory overreach. Instead, the CFPB has gotten incredibly comfortable with evading its legal requirements and implementing policy changes with a “because I say so” approach.
As the Senior Vice President of Government Affairs at the National Association of Federally-Insured Credit Unions (NAFCU), my team and I have worked hard to minimize undue regulatory burden on credit unions. It’s a doable task with many other regulators who understand the benefits of stakeholder input and work with us to find common-sense solutions. The CFPB is not one of those regulators. The bureau makes unilateral decisions, dismisses – or refuses to seek – outside input, and magically makes major overhauls appear like minor tweaks. They don’t want collaboration or input. Instead, CFPB Director Rohit Chopra wants to place down rules and answer any questions “because I say so.”
This isn’t the first time I’ve mentioned their regulatory overreach. Last month, I wrote about how these arduous regulations are causing credit union consolidation. The fact is that if this trend of overregulation continues, the credit union landscape will continue to consolidate.
The bureau’s most recent “advisory opinion” is simply par for the course. This is the new status quo for the CFPB. It’s not about promulgating proper regulations based on real data and ensuring consumer safety. This is political gamesmanship. These types of actions go beyond the CFPB’s regulatory authority and provide little room for course correction.
In September, we released data from a survey on how NAFCU members view the CFPB and its impact on both credit unions and consumers. While you can read the in-depth data, here’s a snapshot of those results:
- less than a quarter of respondents think the financial services space is safer now than it was in 2010;
- 79 percent of respondents do not think the bureau’s actions deter bad actors from engaging in similar practices;
- 92 percent disagree that the bureau has contributed to a more level playing field within the financial services industry;
- 88 percent say the bureau’s regulatory burden has given a competitive advantage to nonbank entities; and
- 90 percent disagree that the bureau’s recent fight against “junk fees” has been well explained and understood by consumers.
CFPB reform is long overdue. It’s time for Congress to overhaul the CFPB and ensure that the unquestionable “checks and balances” system of the American government is met. The bureau needs to be held accountable to its mission and the long-standing, effective processes that were put in place 77 years ago – and not just because I said so, but because the future of the credit union industry and financial well-being of American families and businesses depends on it.