WASHINGTON-Credit unions sent a divided message to Congress last week on the effects of the Dodd-Frank Act.

Deyanira Del Rio, chairman of New York City's Lower East Side People's FCU, told Congress at a hearing on the impact of the Dodd-Frank reforms that her credit union has not been affected in any way by the legislation. But the CDCU' figure's testimony was in stark contrast to the organized credit union lobby, with a Virginia credit union executive representing NAFCU testifying that new burdens imposed by Dodd-Frank have made it more difficult to do business. CUNA President Bill Cheney also expressed similar concerns in a letter submitted this morning to the House Financial Services Committee, which was holding today's hearing.

Del Rio, however, said Dodd-Frank has helped to level the playing field for credit unions and community banks with bigger institutions and unregulated entities.

'Strong Protections Needed'
"The Dodd-Frank Act and other reforms enacted since the 2008 financial collapse have not caused our credit union to raise costs or eliminate services for our members. In fact, our credit union's lending has increased in recent years," Del Rio said. "Strong prudential regulation and consumer protections are needed to prevent future financial crises, and to ensure fairness and opportunity for low income consumers and communities."

The $33 million Lower East Side People's serves 6,000 members.

Del Rio's testimony comes amid increasing pressure from the Republicans controlling the House to roll-back the Dodd-Frank financial reforms, which include the newly created Consumer Financial Protection Bureau. While the Democratically controlled Senate and the Obama administration have been resistant to the roll-back, a Republican takeover of the Senate or White House this fall could improve those prospects.

Del Rio said she believes the Dodd-Frank reforms are properly targeted at the biggest banks and unregulated players in the financial services market and provide adequate exemptions for small credit unions and banks under $10 billion.

"While our credit union supports the Dodd-Frank Act and the mission of the Consumer Financial Protection Bureau, it is important to note that the new regulatory framework makes accommodations for small financial institutions like ours," said Del Rio. "For example, as an institution with less than $10 billion in assets, we are supervised for compliance with consumer financial protection laws by our regulator, the National Credit Union Administration. In addition, the CFPB is required to assess the impact of its rulemaking on small financial institutions and small businesses."

The credit union chairman said her CDCU supported the creation of the new consumer regulator "as the first agency tasked specifically with protecting consumers in the financial services marketplace-a function that was sorely missing in the years leading up to the crash." "From hidden overdraft fees and triple digit APR tax refund loans to predatory "No-Doc" and Payment Option ARMs, low income communities across New York and the country were flooded with high-cost, exploitative products that regulators failed to curb.

"We are particularly supportive of the CFPB's powers to regulate and supervise nonbank entities in the financial services market," Del Rio told lawmakers. "Prepaid debit card companies and money transmitters, for example, have a growing presence in the communities we serve, yet have been insufficiently regulated, particularly with respect to fees and consumer protections."

Contrasting Message
Del Rio's testimony was in contrast to that offered by Lynette Smith, president of Virginia's Washington Gas Light FCU, who was representing NAFCU. "I cannot overemphasize how burdensome and expensive and unnecessary Dodd-Frank Act-related compliance costs will be for credit unions," said Smith, "The greatest impact will likely come from the ever increasing burden of new regulations, whether from the CFPB or functional regulators."

Smith said that it is not any single regulation that magnifies the undue regulatory burden, but rather an accumulation of regulations from various regulators that places a significant burden on small institutions as they struggle to keep up with all the regulations.

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