WASHINGTON – A Consumer Financial Protection Bureau (CFPB) led by a single director is not working for credit unions and has created a rigged system benefitting large banks, CUNA wrote to the House Financial Services subcommittee on oversight and investigations Tuesday.
The subcommittee conducted a hearing Tuesday examining the bureau’s leadership structure.
“It has become apparent over the last six years that the new CFPB, led by a single director, not a commission as Professor [now Sen. Elizabeth] Warren [D-Mass.] and President [Barack] Obama proposed, is not working for America’s credit unions or the more than 100 million members they serve,” the letter reads. “In fact, it has created a rigged system in favor of the behemoth banks who can afford to spread the cost of compliance with one-size-fits-all regulation over large economies of scale.”
The letter highlights that credit unions have been subjected to more than 200 regulatory changes from more than a dozen federal agencies since the beginning of the financial crisis. “This has led to rising costs and fewer choices for credit union members, an unfortunate result since these regulatory changes were intended to address bad behavior credit unions never engaged in,” the letter reads. “Furthermore, disparity in the cost impact of regulatory burden has accelerated the consolidation of the credit union system (and the banking sector), robbing consumers of financial institution choices.”
These rising costs and increased burdens have forced credit unions to cut back or cease offering services and products such as international remittances, mortgages, home equity lines of credit and re-evaluate whether they can comply with new proposals for short-term, small-dollar loans.
CUNA also urged Congress to consider a number of structural reforms to the CFPB, including:
- Modernize bureau leadership to include a multi-member commission, which CUNA believes would ensure diverse perspectives are brought to rulemaking processes;
- Fund the CFPB through the appropriations process, adding a level of oversight that would force the bureau to prioritize resources on problem areas;
- Clarify the CFPB’s exemption authority under section 1022 of the Dodd-Frank Act. CUNA believes the bureau’s failure to utilize this authority has “harmed consumers seeking safe financial services;”
- Enact safeguards to prevent the CFPB’s abuse of its Unfair, Deceptive and Abusive Actions and Practices authority; and
- Increase the CFPB’s supervisory threshold to credit unions and banks with more than $50 billion in assets, up from the current $10 billion.
These changes are part of CUNA’s bipartisan, pro-consumer Campaign for Common-Sense Regulation, launched earlier this year.
in Industry News