The following article, part of CU Journal's July 13 Bonus Content, is an extended version of the way it appeared in print.
WASHINGTON — A NAFCU director told Congress last week credit unions and banks should be exempt from the proposed Consumer Financial Protection Agency because NCUA and other regulators already regulate the products and services they offer.
In addition, the oversight of a new agency could conflict with safety and soundness issues focused on by NCUA, Ed Templeton, president of SRP FCU, in North Augusta, S.C., and a NAFCU director, testified before the Senate Banking Committee, which is reviewing the effect of the recession on rural credit unions and banks.
"Such a conflict and burden will surely increase compliance costs to credit unions, leading to diminished services to their members," said Templeton. "Credit unions already fund the budget for NCUA. Under the Administration's proposal for the CFPA, it also appears that the agency would be funded by the industry, meaning an additional cost burden to credit unions and their 90 million members."
Instead, the credit union CEO said NAFCU endorses NCUA's proposal to create a consumer protection office within the agency. "Recognizing that more should be done to help consumers, we would propose that, rather than extending the CFPA to federally-insured depository institutions, each functional regulator of federally-insured depository institutions strengthen or establish a new office on consumer affairs," said Templeton.
"Consumer protection offices at the functional regulators will ensure that those regulating consumer issues at financial institutions have knowledge of the institutions they are examining and can provide expertise and guidance on consumer protection. This is particularly important to credit unions, as they are regulated and structured differently than others in financial services," he said.
The same committee has scheduled a hearing next week on the proposed Consumer Financial Protection Agency, where Obama administration and officials and industry representatives will testify.
NAFCU's Templeton, and a witness representing CUNA, Frank Michael, president of Allied CU in Stockton, Calif., also urged the senators to lift the cap on member business loans, providing another stimulus to combat the current economic downturn.
