Nussle letter to CFPB Director Cordray on CFPB’s 5th anniversary

WASHINGTON, DC (July 21, 2016)

The Honorable Richard Cordray Director
Consumer Financial Protection Bureau 1275 First Street, NE
Washington, DC 20001

Dear Director Cordray:

As you are aware, today marks the fifth anniversary of the Consumer Financial Protection Bureau (CFPB). The Credit Union National Association (CUNA), which represents America’s credit unions and their more than 100 million members, recognizes the CFPB’s five years of service to consumers of the financial services industry and, as you state, “five years working to ensure that banks, lenders, and other financial companies treat [consumers] fairly.” Credit unions, as you know, share this commitment as consumer protectors and play a crucially important role in the lives of their members. For the past century, they have had a mission to promote thrift and provide access to credit for provident purposes. However, over the last five years, we have become increasingly concerned that the accumulation of consumer financial services regulations is making it more difficult to fulfill this mission.

In short, we are concerned that credit union members are becoming collateral damage in the CFPB’s attempts to regulate the “banks, lenders, and other financial companies” in the industry. Credit unions recognize that they operate in a highly regulated industry and must bear the reasonable costs of regulation. However, unnecessary, overly burdensome, and duplicative regulations mean that credit union members are not able to fully access the high-quality products that credit unions provide. It also means that resources credit unions would otherwise apply to more fully serving their members are spent instead on compliance, and in 2014, the total financial impact of regulations and lost revenue on credit unions was $7.2 billion.

We write this letter to you today, on the agency’s fifth anniversary, to request that the CFPB more fully consider how regulations are in many circumstances making life more difficult for credit union members, and urge it to reconsider its approach on rulemakings. There are a few specific areas the CFPB should be focusing on to better serve credit union members going forward: Tailoring rules to focus on abusers of consumers by using the CFPB’s exemption authority to protect credit union members, analyzing the cumulative impact of rulemakings on credit unions and their members, working more closely with other regulators including the NCUA, and working to understand the credit union difference by visiting credit unions and becoming more familiar with their operations.

First, CFPB regulations should be more directly targeted at problems in the financial services marketplace. CUNA supports the mission of the CFPB, which is to make consumer financial markets work for consumers, responsible providers, and the economy as a whole. However, we do not agree with the CFPB’s application of regulatory requirements to credit unions that are responsible service providers, already heavily regulated, and in many instances, unable to absorb additional regulatory requirements intended to address the problem actors in the industry.

Narrowly tailored rules that directly target fixing problems at financial entities posing risk to the financial lives of consumers would be strongly supported by the credit union industry, who saw firsthand during the financial crisis how their members suffered because of unscrupulous lenders. Credit unions were present for their members during that time and still continue to provide them with affordable credit. Now, instead of being recognized for their difference and commitment to consumers during the good times and bad, they are being hit with one-size-fits-all regulations that are doing far less damage to the entities that actually caused the problems they worked to fix. Credit unions, as a result, have been forced or will be forced to limit offering the products and services to consumers that are part of the solution, not the problem.

Credit unions have urged the CFPB to use its exemption authority not for every rulemaking, but where necessary, when credit unions were not responsible for the problems being addressed by the specific regulatory change. This was the intent of Congress when it provided the CFPB with exemption authority in Section 1022 of Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank Act).1 Congress acknowledged that targeted rulemaking may be more appropriate at times when it provided exemption authority to the CFPB to exempt any class of covered persons from any provision of Title X or any rule issued by the Bureau under Title X.2 Congress recently reiterated this clear intent in bipartisan letters to the CFPB signed by an overwhelming super majority, 75 percent of the members of the House and Senate.

As CUNA and credit unions have frequently stated to the CFPB, this current environment has been one of massive regulatory change, and while some of this change is positive in curtailing irresponsible and risky practices by lenders and financial services providers, for credit unions, many of the new requirements have been superfluous, unnecessary, ineffective, and overly costly. CUNA became particularly concerned with the direction of the CFPB’s rulemakings when the Home Mortgage Disclosure Act (HMDA) rule was finalized last year with little consideration of the compliance burden it would cause credit unions. We were also disappointed with the publication of the proposed payday, small dollar, and vehicle title rule, which would include new requirements for many credit union loans that are offered in consumer friendly ways and are often the best option a member has.

We urge the CFPB to listen to the voices of 75 percent of House and Senate members, and provide exemptions for credit unions from rulemakings intended to address the irresponsible practices of other institutions in the industry.

Second, at this five-year mark, we urge the CFPB to analyze the cumulative effect its recent and current regulations have had on smaller and less complex financial institutions, such as credit unions, before finalizing or proposing any new regulations that would affect these institutions, not required by law. This

approach can better insure that regulations do not cause institutions, such as credit unions, to limit their participation in certain markets, thereby negatively affecting consumer choice and access to safe financial products and services. While writing rules is one way to protect consumers, the CFPB should also consider whether it has put forth the appropriate time and effort to work with credit unions. Going forward, we urge the CFPB to collaborate more with credit unions to help protect consumers. This could include spending more time and resources working together to provide financial education to communities, and allowing more flexibility and opportunities to further consumer-friendly innovation.

Third, CUNA urges the CFPB to work more closely with the National Credit Union Administration (NCUA) to learn how recent regulations have impacted credit unions and their ability to provide products and services to their members. Greater communication between the agencies can help CFPB officials have a better understanding of the credit union model and how regulatory requirements may affect credit unions differently than larger more complex institutions. Greater cooperation is also needed with state regulators and non-prudential federal regulators who also impact the lives of credit union members. As just one example, the CFPB and the Federal Communications Commission have provided credit unions with conflicting guidance about how they can contact financially distressed consumers on their cellphones. More clarity, consistency, and rules that better account for the needs and preferences of consumers would benefit everyone, especially the consumers who rely on information from their credit union.

Finally, CUNA would be pleased to arrange a visit for you and other top CFPB officials to see a credit union headquarters to get a firsthand view of the compliance process for the various new regulatory requirements, particularly the “Know Before You Owe” regulatory changes and the new Home Mortgage Disclosure Act (HMDA) requirements. We believe such a visit would provide you and CFPB staff with a broader perspective on the large effect even a minor regulatory change may have on a credit union’s operations, and the difficulty credit unions have had over the past five years absorbing, understanding, and implementing the thousands of pages of CFPB regulatory changes.

Overall, it has been a long five years for credit unions, the institutions that are owned by the consumers they serve. We hope that moving forward, the CFPB will consider the differences between the lending practices and unique circumstances of consumer-run credit unions and the practices of the financial institutions that were the aim of the Dodd-Frank Act. The “one-size-fits-all” and product-based approach to rulemaking simply does not work for credit union consumers, which are more than 100 million Americans. These consumers need the CFPB’s protection too, and we hope that moving forward, they get it.


Jim Nussle President & CEO


1 See Public Law 111-203, 124 Stat. 1376 (2010).
2 See 12 U.S.C. § 5512(b)(3)(A) (stating the CFPB “may conditionally or unconditionally exempt any class of covered persons … from any provision of [Title X], or from any rule issued under [Title X], as the Bureau determines necessary or appropriate to carry out the purposes and objectives of” the Title).

About CUNA

Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit To find your nearest credit union, visit


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