WASHINGTON — Credit unions called on Congress last week to water-down the powers of the new Consumer Financial Protection Bureau — even before the new agency has opened its doors.
"We believe that if a (consumer protection bureau) is to exist, its primary focus should be on regulating the unregulated in the financial services arena, and not adding new regulatory burdens to those entities that already fall under a functional regulator," said Lynette Smith, president of the $80-million Washington Gas Light FCU in Springfield, Va. in her testimony before the House Financial Services Committee.
The credit union CEO, who was appearing on behalf of NAFCU, urged lawmakers to exempt credit unions from all rulemaking and enforcement powers of the new consumer agency and leave them with NCUA; to prevent the new agency from participating in "ride-along" examinations with credit union regulators; bar the agency from access to confidential credit union financial reports; and exempt the biggest credit unions-those over $10 billion in assets-from the agency's reach.
Under the new consumer protection scheme the agency will develop and enforce consumer regulations for credit unions and banks, while NCUA and state regulators will continue to examine credit unions to monitor for compliance, except for credit unions over $10 billion, which will be examined by the new consumer agency.
State Employees CU of Maryland CEO Rod Staatz, appearing for CUNA, told lawmakers credit unions are concerned the new agency will pile on additional regulations, adding to a growing regulatory burden caused by the financial crisis.
"These concerns are compounded by the range of upcoming regulations credit unions will face under the Dodd-Frank Act," said the CEO of the $2-billion credit union, who recommended the new consumer agency create an office solely aimed at reducing regulatory burden on community banks and credit unions.
Director Approaches CUs
The new assault by credit unions-who opposed their inclusion in the consumer protection scheme-comes amid peace entreaties by presidential advisor Elizabeth Warren, who is creating the new agency.
Warren, who met recently with leaders of CUNA and NAFCU and spoke during CUNA's Governmental Affairs Conference, visited last week with California credit union leaders at San Diego Community CU to try to enlist credit union support for the new agency.
Several Bills Aim To Water Down CFPB
Republican leaders in the House-who fought creation of the consumer agency as part of last year's Wall Street reform bill-have introduced several bills aimed at watering down the agency's powers.
One would expand the oversight of the consumer bureau from a single director, who they fear will be the liberal activist Warren, to a five-member board like the ones that monitor other financial regulators. Another would make it easier to scrap new regulations promulgated by the agency.
Another would prevent examiners at the new agency from accompanying examiners at NCUA and the banking agencies to examinations, so-called ride-along examinations. Last week's hearing was being held to discuss those bills.
The credit union representatives appeared along side of representatives from the American Bankers Association, the Independent Community Bankers of America, and the Consumer Bankers Association.