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CUNA's Dunn Outlines CARD Act Challenges For CUs
CHICAGO (10/3/13)--Credit unions' cooperative structure sets them apart in the credit card industry, Credit Union National Association Deputy General Counsel Mary Dunn said Wednesday at the Consumer Financial Protection Bureau's field hearing here.

"Credit unions don't view themselves as part of the credit card industry, we
Click to view larger image Credit Union National Association Deputy General Counsel Mary Dunn addresses the Consumer Financial Protection Bureau's field hearing on credit cards Wednesday.  What sets credit unions apart from other credit card issuers is that they operate for the purpose of promoting thrift, providing credit, and providing other financial services at competitive rates, she noted in prepared remarks.
view ourselves as cooperatively owned financial institutions that provide cards and services because our members want them," Dunn told the crowd of CFPB staff, including Director Richard Cordray, consumer activists, other card issuers and more. What sets credit unions apart is that they operate for the purpose of promoting thrift, providing credit, and providing other financial services at competitive rates, she noted in prepared remarks. (For more on the hearing, see related story: CFPB's Cordray Reports CARD Act Progress For Consumers.)

Therefore, Dunn told the field hearing, credit unions do not see themselves as competing with banks in the credit card space. Rather, they look for ways to offer products their members will benefit from, and do so by offering lower fees and better rates to their members, Dunn said. As one example, Dunn said on a non-rewards credit card program, a credit union member will save $100 per year when compared with what they would pay for a similar card from a bank.

Dunn made her remarks during a Wednesday field hearing on credit cards and the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). She spoke on a panel that included Legal Assistance Foundation of Chicago Supervisory Attorney David Yen, U.S. PIRG Consumer Program Director Ed Mierzwinski, Sanjay Sakhrani, equity researcher with Keefe, Bruyette & Woods, and Citi Retail Services CEO Bill Johnson.

The CARD Act was enacted in 2009 to prohibit and restrict a number of credit card practices.

Remaining nimble enough to provide services members want when there are so many options out there is one of many challenges the CARD Act poses for credit unions, Dunn said. And, she added, the CFPB must work to make sure that consumers are adequately protected while at the same time allowing financial institutions to do their jobs and provide financial services.

Credit unions want to ensure that consumers continue to receive reasonable protections, and support the stated intent of the CARD Act, Dunn noted. However, she added, credit unions are adamant that regulatory requirements must not become any more cumbersome for credit unions than they are now.

Dunn in prepared remarks said the CARD act has resulted in some benefits: Borrowers are better informed on the interest rates and fees they will pay, there are adequate interest rate restrictions, and penalty fees are more "reasonable and proportional."

However, increased compliance costs have made it more expensive for credit unions and others to operate card programs, she said. The CARD Act has also had a disparate impact on the cost of credit for those with marginal credit, and there is concern that some issuers are approving fewer credit card applications as a result of the Act, Dunn noted in her prepared remarks.


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