WASHINGTON-Banks and CUs have finally found common ground-both loathe the Consumer Financial Protection Bureau.
Neither community banks nor credit unions think they should be subject to CFPB regulations. Credit union representatives said as much during a recent congressional hearing. Rep. Sean Duffy (R-WI) during a House Financial Services subcommittee hearing in April, asked CU executives for the one thing they want most from Congress.
"Exempt credit unions from CFPB regs," responded Robert Burrow, president of $317-million Bayer Heritage FCU in Proctor, W.Va.
Short of that request, Burrow said he supports a NAFCU effort to let NCUA overrule or delay any CFPB regulation, and to require the CFPB and NCUA to perform a "look-back, cost-benefit analysis of all new rules."
"It is not one single regulation that is creating this ever-increasing burden-rather [it is] the tidal wave of new rules and regulations," Burrow told the subcommittee.
James Ballentine, chief lobbyist for the ABA, was open to those proposals. However, if CUs get those breaks, small banks should, too, he said. "To the extent there is going to be a level playing field, we would agree to that," Ballentine said in an interview. "But to say banks should perhaps have this level of regulation and [credit unions] shouldn't, we certainly would not agree to that."
Further, Ballentine said that credit unions and banks, despite their longstanding animosity toward each other, could cooperate to fight CFPB regulations.
Under Pressure
A CFPB spokeswoman declined to comment, referring questions to remarks that Director Richard Cordray made in February at CUNA's GAC, when he said the bureau "is well aware that credit unions were not one of the causes" of the recent financial crisis.
Banks and credit unions nevertheless feel pressured by the CFPB. Some credit union executives gave specific examples to the House subcommittee about which CFPB regulations they find the most burdensome. The CFPB proposal to increase regulation of international money transfers, for instance, could force most credit unions out of that business, says Mitchell Reiver, general counsel of $1.9-billion Melrose Credit Union in Briarwood, N.Y.
There are many other concerns with the CFPB shared by community banks and credit unions, the largest being the proposed rule for qualified mortgages, the category of super-safe loans, and qualified residential mortgages, says Paul Merski, chief economist for the Independent Community Bankers of America. Some smaller issues are also alarming to both sides, he says.
NAFCU supports a cooperative effort between banks and credit unions, said Brad Thaler, VP-legislative affairs. "We're willing to work to try to find common ground."
Community banks and credit unions have more similarities than differences, says Pamela Stevens, CEO of $57-million Security One FCU in Arlington, Texas. We're looking for fairness. We would hope the CFPB would use some of their powers to exempt institutions that didn't cause the problems and not use the same brush that many of the larger bank players are being brushed with," said Stevens.
