WASHINGTON, DC (October 29, 2013) -- The National Association of Federal Credit Unions (NAFCU), in a hearing before the House Financial Services Committee today, emphasized that the Consumer Financial Protection Bureau (CFPB) continues to impose unnecessary regulatory burden on credit unions and described specific changes for the CFPB that could help mitigate that burden.
Lynette Smith, president and CEO of Washington Gas Light Federal Credit Union in Springfield, Va., testified on behalf of NAFCU at the hearing held by the Financial Institutions and Consumer Credit Subcommittee titled “Examining Legislative Proposals to Reform the Consumer Financial Protection Bureau.”
In Smith’s written testimony, she stressed that NAFCU was the only financial services trade association to oppose credit unions of any size being placed under the CFPB’s direct regulatory authority. “Despite the fact that credit unions are already heavily regulated and did not contribute to the financial crisis, credit unions of all sizes are still subject to the rulemaking authority of the CFPB,” said Smith. “While some may argue that the CFPB is ‘leveling the playing field’ for community-based financial institutions, the reality could not be further from the truth, as smaller community-based financial institutions do not have the armies of lawyers that large Wall Street banks have to keep up with the pace of regulations coming out of the CFPB.”
She underscored the regulatory burden on credit unions. “A survey of NAFCU members from late last year found that 94 percent have seen their regulatory burden increase since the enactment of the Dodd-Frank Act in 2010,” she said. “There are 700 fewer credit unions today than there were before passage of the Dodd-Frank Act.”
In addition, Smith detailed certain measures, supported by NAFCU, that would help mitigate some of the burden arising from CFPB activities.These include creating a five-person board to govern the CFPB, expanding the Financial Stability Oversight Council’s veto authority over proposed rules, establishing layers of protection for sensitive data collected by the CFPB, and requiring the CFPB to go through the congressional appropriations process for funding.
In February, NAFCU released its five-point plan for regulatory relief to help credit unions that are overburdened by the increase of regulations after the financial crisis. Many points from the plan are incorporated into H.R. 2572, the “Regulatory Relief for Credit Unions Act of 2013.” Smith lauded the legislation, introduced by Rep. Gary Miller, R-Calif., which would allow NCUA to modify CFPB rules for credit unions and would require NCUA and CFPB to implement a cost/benefit analysis for every rule after three years, among other conditions.
Smith concluded, “While we believe that the CFPB can fill an important role in regulating the previously unregulated bad actors that operate in the financial services marketplace, credit unions remain at a loss as to why they were placed under a new regulatory regime to begin with as it has meant an overwhelming increase in regulatory burden.”
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The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.