Sen. Scott presses Cordray on credit union exemption authority
WASHINGTON, DC (April 8, 2016) — Sen. Tim Scott (R-S.C.) expressed concern over the effects of regulation on credit unions and community banks to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray Thursday, and Credit Union National Association (CUNA) took note of inaccuracies in Cordray’s response. The exchange came during Cordray’s semiannual testimony before the U.S. Senate Banking Committee, a video of which is available here.
“The regulatory burden impacts [small] institutions. The higher the cost to them, the lower the access, and the unintended consequence seems to be 4.4 million households that are un- and underbanked,” Scott said.
Cordray noted that credit union memberships, which recently hit 105 million, are at an all-time high, but Scott correctly pointed out that the number of credit unions is going down.
Scott went a step further pointing out that the contraction of credit unions and banks is “obviously happening,” likely as a consequence that comes with burdensome rules from the CFPB and other regulators.
CUNA has consistently pointed out to the CFPB, which says it is a consumer-focused regulator, that consumers in fact lose when credit unions and other community institutions are forced to withdraw products and services due to regulatory burden.
CUNA submitted a letter to the hearing stating that “poorly tailored” rulemakings from the CFPB accelerate the consolidation phenomenon and impact credit unions’ ability to fully serve their members. For more detail on the letter, see “CUNA expands on CFPB concerns in letter to Senate Banking” in today’s News Now.
“Where we have evidence that we think we can build on a particular rulemaking…we will tailor for small institutions because that’s often the right answer. They are responsible, close to their customers, and they provide good service,” Cordray said.
During the hearing, Cordray also confirmed that the National Credit Union Administration’s Payday Alternative Loan (PAL) program would not be impeded by the bureau’s upcoming rule on short-term, small-dollar loans. When discussing potential solutions to protecting consumers from predatory lenders, Cordray said credit unions were one option.
“Credit unions do offer a small-dollar product, called a PAL product, it is blessed into law. We think it’s a good product and we want to make sure there’s room for that under any regulations we adopt,” he said.
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 cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.