Sometimes it's easy to turn a blind eye to stuff that's off in the distance and doesn't really have a direct impact on you.
Too easy, in fact.
Then, next thing you know, that thing that was off in the distance lands right on your doorstep.
Stuff like Operation Choke Point, Dodd-Frank rules still to be written on bank executive compensation, too big to fail — they're not directly targeting credit unions, so no need to worry about them, right?
"In the financial services environment, there are few things that credit unions don't need to worry about," NAFCU's Carrie Hunt said in a recent interview. "The thing is, you always have to worry about the trickle-down effect."
Look no Further: CFPB
Hunt suggested looking no further than recent history at the Consumer Financial Protection Bureau's information requests that are being sent to credit unions and their vendors. "That's just one small example of an unintended consequence," she said.
Indeed, there are a number of things just from Dodd-Frank alone that were designed very specifically with only banks — sometimes even just the mega-banks — that credit unions cannot afford to ignore.
"There are some things in Dodd-Frank that are very specific that target banks, but the problem is, it has an effect on the financial services market overall, which means, at the very least, an indirect effect on credit unions," she said.
Case in point: CFPB's efforts on overdraft protection. "The goal is to regulate out bad practices," Hunt said. "But this could wind up having a negative impact on credit unions, as well. I like to say it's like the Olympic rings — everything tends to be interrelated."
Credit unions have pointed out time and again that the regulations called for in Dodd-Frank — including the very creation of the CFPB — were created to correct the things that led to the financial crisis; things credit unions, by and large, weren't doing before the crisis and aren't doing now, either. But carrying on about how "we didn't start the fire" made for a decent Billy Joel song, it is largely falling on deaf ears at the CFPB.
Deaf ears don't call for blind eyes. In the wake of the Financial Crimes Enforcement Network's leaked report identifying a handful of CUs as being a potential money laundering vulnerability, suddenly things like Operation Choke Point don't seem all that far off in the distance.
But credit unions can be forgiven for not having the bandwidth to pay a whole lot of attention to things that pose a potential trickle-down threat, when they have so many direct threats squarely on their plates.
Credit unions are monitoring a number of bills currently on the docket that could have a direct impact (some of them good) on credit unions: a bill that would expand what counts as a Qualified Mortgage; the examination fairness bill; one that would replace CFPB's single director with a multi-person commission; another that would extend the deadline on the new TILA/RESPA disclosures; and still another that would require NCUA to hold public budget hearings.
But Do They Have Legs?
Despite about a half-dozen congressional hearings last week, alone, however, don't expect that many of them to get very far, at least in the near-term.
"This summer, if anything has a chance to make real progress in Congress, it's data security," said CUNA's Ryan Donovan, noting that he expects some action on the defense authorization bill in the Senate, as well.
"Of course, we're looking at what's next for the Shelby bill [offering a host of regulatory reforms], but I'm not sure that end game is in sight for this summer, but I expect there to be a lot of behind-the-scenes activity," he said. "There is the possibility that appropriations process could be one approach."
Keep your eyes peeled.
Editor in Chief Lisa Freeman can be reached at firstname.lastname@example.org.