Removing Barriers Blog

It is Long Past Time to Enact CFPB Reforms
Posted July 14, 2015 by CUNA Advocacy

Tomorrow, CFPB Director Richard Cordray will testify before the Senate Banking Committee to deliver the Bureau’s semi-annual report to Congress.  This will be the first of two appearance before Congress this month.  In advance of these hearings, CUNA sent a letter to the Banking Committee reflecting on the impact the Bureau has had on credit unions over the last five years and to encourage Congress to look past the hyper partisan politics of the Bureau to enact improvements designed to minimize the adverse impact the Bureau has had on credit unions.

We sent this letter because the CFPB is not doing enough to make sure that its rules target the abusers of consumers and allow credit unions continue to provide high quality and affordable financial services to their members.  Nearly every rule impacting credit unions that the Bureau has issued has negatively affected credit unions and their members.  When a rule from any regulator reduces credit union service, or makes member service more expensive, that rule has failed consumers.

Our letter recommended several things Congress could do to help the situation – and many of our suggestions are ideas that either the Administration originally proposed or we have supported from the beginning. 

For example, when the CFPB was first proposed, the Administration supported having a five-person board.  That’s right!  The idea for a five-person board isn't ours; it was the administrations.  While it may be counter-intuitive for us to support more regulators at the CFPB, we support the board concept because the debate and deliberation that are achieved when more than one person is promulgating a rule ensures that all sides are heard and the approach takes those concerns into consideration.  A CFPB Board would be consistent not only with the democratic principles on which our country is founded but also with the structure of other independent agencies, including the National Credit Union Administration.

We also reiterated our support for funding the CFPB through the appropriations process.  This is important for two reasons.  First, subjecting the Bureau to the appropriations process will increase Congressional oversight and Bureau accountability.  Second, we know based on the experience we have with many state regulators, that when regulator resources are limited, they are applied to significant issues.  If the Bureau was subject to the appropriations process, it would be under considerable pressure to more thoughtfully apply its resources to the critical issues of consumer abuse in the financial services sector.

Our letter also endorsed legislation to raise the supervisory threshold at the CFPB from $10 billion to $50 billion in assets.  Frankly, we’d like to see the threshold be much higher to ensure that credit unions never have to divert time and resources from member service to engage in an additional examination, but the legislation sponsored by Senators Toomey and Donnelly is a good first step.

There is a lot that needs to be done to focus the CFPB on those entities that are truly hurting consumers.  Credit unions aren’t the problem, but the CFPB’s solutions are keeping credit unions from fully serving their members.  That is a problem.  As we approach the CFPB’s 5th birthday, it’s long past time for Congress to make major changes at the Bureau.