Removing Barriers Blog

Return to Common-Sense Regulation Top Priority in 2017
Posted January 03,2017 by Ryan Donovan

As the 115th Congress assembled, CUNA sent a letter to the House and the Senate outlining credit union priorities in 2017, and calling on Congress to return to common-sense regulation for credit unions.  As we have discussed over the last several months, we see a lot of opportunity to advance regulatory reform legislation that improves the operating environment for credit unions to serve their members. 

We told Congress:

  • Credit unions accept that they must operate in a regulated environment.  Common-sense regulation balances safety and soundness, consumer protection, and members’ needs.  The behavior of the large Wall Street banks, some nonbank financial services providers, and other abusers of consumers caused the greatest financial crisis since the Great Depression, throwing this balance out of whack.  The post-crisis regulatory response, which has resulted in the Consumer Financial Protection Bureau (CFPB) applying one-size-fits-all consumer protection regulation to all providers regardless of size, structure, or history of consumer service, has further disrupted the common-sense balance.
  • One-size-fits-all does not work for Main Street – local credit unions, small banks, and the consumers and small businesses they serve.  It has created a rigged system favoring the largest institutions that can afford to comply with these new, complex regulations. Credit union members themselves feel the adverse impact of this rigged system when basic financial services offered by credit unions become less available and more expensive.
  • The very regulations aimed at reining in the abuses of Wall Street banks and other abusers of consumers are slowly but surely robbing consumers of Main Street financial services.  The law and regulations ought to be doing just the opposite.  Local member-owned credit unions know and understand their members better than the mega-banks do.  They are, and have always been, the most consumer friendly financial institutions.

To ensure the continued viability of community-based financial institutions, we urged Congress to enact legislation that modernizes the Consumer Financial Protection Bureau (CFPB) and addresses problems that several of its final and pending rulemakings have presented credit unions and their members.  This includes legislation to improve the structure of the CFPB by replacing the director with a commission, as was first proposed by the Obama administration, and bringing the CFPB under the appropriations process to provide enhanced Congressional oversight and to force the CFPB to prioritize its resources.

It’s important for us to be very clear in our advocacy on these issues.  Supporters of the CFPB have expressed concern that we are simply standing with those who would neuter or disable the Bureau.  Our goal is different than those who seek to cripple the Bureau:  we seek to make the Bureau work for credit unions and their members.  Credit unions are the original consumer protectors in the financial services sector; commonsense consumer protection regulation recognizes that our structure and mission makes us different.  We believe we can return to commonsense regulation through structural improvements to the Bureau, and we do not believe those structural improvements will make the Bureau any less effective for consumers.