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CU reg burden focus of CUNA Hill letter CU testimony
WASHINGTON (7/20/11)—Making it easier for the Financial Stability Oversight Council (FSOC) to stay or set aside potentially burdensome Consumer Financial Protection Bureau (CFPB) rules would balance consumer protection with safety and soundness concerns, the Credit Union National Association (CUNA) said in a letter to Speaker of the House John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.). The FSOC is comprised of National Credit Union Administration (NCUA) Chairman Debbie Matz, Treasury Secretary and FSOC Chairman Tim Geithner, Federal Reserve Chairman Ben Bernanke, and other regulators. The council, which held its first meeting in October of 2010, is charged with monitoring the financial system, overseeing the resolution of troubled financial institutions and providing a forum for discussion between financial regulatory agencies. A bill (H.R. 1315) scheduled to be considered by the House this week would reduce the voting threshold needed for the FSOC to stay or set aside rules finalized by the CFPB from a two-thirds vote to a majority vote. The CFPB director would not be part of that vote. “Given the financial crisis from which we are struggling to emerge, the threshold to prevent harmful regulation from going into effect should not be as high as a two-thirds vote of the financial regulators,” CUNA said in support of that provision of the pending legislation. Potential regulatory issues could also be avoided if the CFPB, as suggested by CUNA, creates its own department whose function would be to monitor regulatory burden. Such an office could be tied to the CFPB’s Office of Community Banks and Credit Unions, and could work with the National Credit Union Administration (NCUA) and other prudential regulators to assess the regulatory burdens face by credit unions and other financial institutions, the CUNA letter said. The CFPB was also the central topic of a Tuesday Senate Banking Committee hearing entitled “Enhanced Consumer Protection After the Financial Crisis.” Truliant FCU president/CEO Marcus Schaefer told the committee that while a consumer protection-focused regulator is a necessary part of the U.S. financial landscape, regulators should recognize that broadly implemented regulation can negatively impact the consumer-friendly practices of credit unions. Schaefer, testifying on behalf of Truliant, is also chairman of the CUNA Federal Credit Union Subcommittee. “Seemingly small regulatory dictates can have a large impact on [credit unions and other small institutions] and ignore their ‘local knowledge’ of how best to communicate with members,” Schaefer added. He also warned that “there may be unintended consequences to consumer-friendly institutions as the ‘bad actors’ are reined in by ‘one-size-fits-all’ regulations.” The CEO of the $1.5 billion, 180,000 member, Winston Salem, N.C.-based credit union testified alongside Center for Responsible Lending president Michael Calhoun, SpiritBank CEO Albert Kelly, Jacksonville Area Legal Aid representative Lynn Drysdale, U.S. Chamber of Commerce representative Andrew Pincus, and Georgetown University law professor Adam Levitin. The CFPB will take on oversight of the Equal Credit Opportunity Act and the Fair Credit Reporting Act, as well as regulations addressing electronic fund transfers, mortgage originator registration, and mortgage assistance relief services, on that date. The CFPB is taking over authority of these and other rules from the National Credit Union Administration, the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Trade Commission, and the U.S. Department of Housing and Urban Development. President Barack Obama named Richard Cordray as his nominee for CFPB director on Monday. (See related July 19 story: Obama announces Cordray as CFPB nominee.) For CUNA’s letter to Congress and more on the Senate hearing, use the resource links.
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