FARMERS BRANCH, Texas (9/20/12)--While many credit unions are weighing in on the regulatory burdens that new regulations are posing, some are explaining to their members exactly what the new regulations will mean to them--and urging their members to comment as well.
"Members of credit unions can't fathom the meaning of increased regulatory actions on their credit union--unless your tell them," said Winter Prosapio, assistant vice president of public affairs at the Texas Credit Union League, in the league's blog Wednesday. She pointed out that Wayne Vann, CEO of the $1.5 billion asset Navy Army Community CU based in Corpus Christi, Texas, did just that.
In a newsletter article, Vann spelled out how regulatory changes recently proposed by the Consumer Financial Protection Bureau (CFPB) would impact his credit union's members.
"Though the CFPB's purpose is to provide oversight, what we have experienced to this point has been the implementation of stricter regulations and requirements for financial institutions," Vann wrote. "These regulations drive all financial institutions' costs upward; which of course, in turn, filters down to you, the member.
"The most recent requirement involves real estate appraisals," he said. "In the past, we have relied on various no-or-low cost sources to gain valuations. Going forward, that is not an option; and therefore, every real estate advance will require a certified appraisal at an average cost of $375. Note: this is just one example of a cost increase," he wrote.
He told members he supports consumer protection but believes the agency is "misguided, and its rule-making will have unintended consequences." He recommended members go online to consumerfinance.gov to research the agency. "Write them! Call them! Email them! Encourage thorough examination and scrutiny of any rule changes and their effect on you and your wallet," he urged.
The league's blog provided three tips for crafting such a letter to credit union members. Members need to know:
What the CFPB is and how it works. While very familiar to credit unions, CFPB "will come as a complete surprise to most members. Note that the bureau is just over a year old and that its purpose is to protect consumers from bad actors in the financial sector. However, due to the nature of regulation, many of those rules will apply also to not-for-profit credit unions as well," said the league.
What the unintended consequences are. Vann told how costs will rise. Many credit unions may no longer offer certain services--such as remittances--as a result of CFPB's rule changes. And its attempt to protect consumers may actually hurt them by possibly decreasing available credit if lenders cease offering certain types of lending products because of cost and the complexity of compliance.
That their voices matter. Regulators want to hear concerns from consumers more than anyone, said the league. "Their voices are valuable in shaping these rules, so the end result is favorable for the very individuals who will, in the end, bear the costs of these regulations. Urge members to ask CFPB to focus on bad actors, but to exempt credit unions from its costly and burdensome new regulations, said the league.