Is there a downside to compromise? Dan Berger, president and CEO of the National Association of Federal Credit Unions thinks so. In an editorial published in the association’s newsletter on February 24, he discussed his regrets that the Consumer Financial Protection Bureau (CFPB) has the authority to regulate credit unions.
He said that sometimes the surest way to log a “win” is to strike a compromise, but the compromise worked out concerning the enactment of the Dodd-Frank Act and creation of the Consumer Financial Protection Bureau has not been favorable to NAFCU and its customers. NAFCU and its board vehemently opposed the CFPB having any rulemaking authority over credit unions, while other groups folded.
Over time, the association has held to these views. In 2015, then-SRP FCU President and CEO Ed Templeton said, “As expected, the breadth and pace of CFPB rulemaking is troublesome, and the unprecedented new compliance burden placed on credit unions has been immense. Many smaller institutions simply cannot keep up with the new regulatory tide and have had to merge out of business or be taken over.”
Berger feels that this is one compromise that hasn’t worked out well. The CFPB’s reach is ever expanding and CUs are forced to deal with the growing compliance burden.
Case in point: compliance deadlines for the amendments to the mortgage servicing rules, the new Home Mortgage Disclosure Act rules and the Bureau’s final rule on prepaid accounts all converge this fall.
“This is not to say that NAFCU and its members don’t support the CFPB’s goal of protecting consumers–we do,” Berger said. “However, credit unions did not participate in the activities that led to the 2008 financial crisis that the Bureau was created to address.”
All these current and pending rules explain why NAFCU has been locked in a fight with the CFPB over how it should not be regulating the credit union industry. “NAFCU always serves in the best interests of the association’s members and the industry as a whole. That will not change,” he wrote.
Berger and others, no doubt, are hoping for a miracle on May 24 when the U.S. Court of Appeals of the D.C. Circuit will review a ruling that struck down the CFPB. This action sets the stage for a legal fight that carries significant implications for the future of the agency in the Trump administration. It also gives the CFPB another chance to defend itself as Republicans in Congress, push to roll back the agency’s authority.
Berger explained that the credit union industry is in need of regulatory relief, and one easy way to accomplish that “would be to pull credit unions out from under the regulatory authority of the CFPB–or, at the very least, limit the number of rules from the bureau that would apply to credit unions.”
“No one–especially not a government bureau–knows the individual financial needs of members better than the credit unions that serve them,” he wrote. “NAFCU will continue this fight–with no compromise–so credit unions can continue to operate in the upright manner they always have for their 106 million members.”