Lawmakers Lobby for CFPB to Exempt Credit Unions from Rulemakings

A bipartisan group of 329 members of the U.S. House of Representatives wrote a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray urging the director to use the CFPB’s authority granted by the Dodd-Frank Act to exempt credit unions from certain regulations set forth by the Bureau.

The relationship between the regulator for credit unions, the Credit Union National Association (CUNA), and the CFPB has been a rocky one since the Bureau’s formation nearly five years ago, with CUNA claiming that credit unions should not fall under the CFPB's oversight because they did not play a role in the 2008 financial crisis. Cordray may have fanned the flames in February when he defended the Bureau’s oversight of credit unions and several of the Bureau’s mortgage-related regulatory changes, namely the Qualified Mortgage rule and the new servicing rules, in a public speech at CUNA.

Reps. Adam Schiff (D-California) and Steve Stivers (R-Ohio) led the bipartisan group of House members in writing the letter, which praised credit unions and community banks for the “safe and sound” lending opportunities they provide for their customers. The lawmakers also noted in their letter that the CFPB routinely does not distinguish credit unions and community banks from the largest lenders for which their regulations were intended.

The CFPB “may unintentionally burden community-based financial institutions and limit the choice and availability of consumer credit,” according to the letter.

“(The CFPB) may unintentionally burden community-based financial institutions and limit the choice and availability of consumer credit.”

The letter cited a recent report by the Government Accountability Office on the regulatory impact of some of the provisions set forth by Dodd-Frank, and “the study found that there are a number of cases where financial services have been limited or discontinued by community-based financial institutions due to new requirements.”

The lawmakers pointed out that Section 1022(b)(3)(a) of the Dodd-Frank Act gives the CFPB authority to exempt “any class” of entity from its rulemakings and regulations.

“As you undertake rulemakings, we urge you to consider the benefits credit unions and community banks provide and ensure that regulations do not have the unintended consequence of limiting services or increasing costs for credit union members or community bank customers,” the House members wrote.

The National Association of Federal Credit Unions (NAFCU) praised the lawmakers’ efforts.

“We thank Representatives Schiff and Stivers for their leadership on this issue, as well as all of the members of Congress that signed the letter for their recognition of the overwhelming regulatory burden facing today’s credit unions,” NAFCU Vice President of Legislative Affairs Brad Thaler said.

Click here to view the entire letter.