WASHINGTON – At least one lawmaker is expected to propose an amendment to financial services reform legislation today that would exempt all credit unions from the new Consumer Financial Protection Agency.
Instead, the measure, supported by NAFCU and the American Bankers Association, would have credit unions and most banks examined by their current regulators – for credit unions, NCUA or state supervisors – who also would enforce any compliance issues on consumer regulations.
NAFCU, which has been lobbying for the credit union carve-out from the consumer protection agency, is unsatisfied with efforts to exempt credit unions up to $10 billion from examination by the new agency. "It’s always been NAFCU’s policy not to divide the industry," said Fred Becker, president of the lobby group.
Becker noted that under the $10 billion exemption there would still be three credit unions – NAFCU members Navy FCU and Pentagon FCU, as well as North Carolina Employees’ CU – that would be examined by the consumer agency. In addition, he noted there are as many as 10 other credit unions that could hit the $10 billion mark over the next few years and would then be covered by the new agency.
NAFCU has been lobbying Congress to exempt all credit unions from the new agency’s jurisdiction and have the responsibilities for consumer protection reside within NCUA. The group even convinced NCUA to beef up its own consumer protection efforts by creating an office of consumer protection, which will be launched Jan. 1.
The credit union carve-out is among more than 100 amendments that will be considered by the House Rules Committee this afternoon as it sets the grounds for the debate on the financial services bill, which is scheduled to commence this evening. The bill will combine as many as seven different bills on consumer protection, creation of a systemic risk regulator, combination of bank regulators, regulation of Wall Street rating agencies, new rules for trading and regulating financial derivatives and standards for secondary market mortgage sales. Also to be debated is a controversial measure – opposed by CUNA and NAFCU – which would allow bankruptcy courts to amend the terms of at-risk mortgages, the so-called cramdown provision.
The credit union carve-out is one of several amendments expected to be proposed that would ease the burden of the consumer protection agency on credit unions. One would raise the exemption for credit unions from the agency’s exemptions from the $1.5 billion limit approved earlier this month by the House Financial Services Committee to $10 billion, covering all but three credit unions. Another would exempt all federally insured credit unions and leave the responsibility for monitoring their compliance with consumer regulations with their "functional" regulator. Under that amendment, to be proposed by Rep. Ed Perlmutter, D-Colo., the functional regulator would have 120 days to bring an enforcement case after a compliance issue has been brought to light, after which it would be referred to the new consumer agency for enforcement.
