WASHINGTON – Credit union executives called on Congress this morning to help them deflect new regulations being drafted by the fledgling Consumer Financial Protection Bureau, saying proposals in the pipeline will add significant costs and manpower burdens.
Terry West, president of Florida’s $5 billion VyStar CU, called on Congress during this morning’s hearing to ensure that the new consumer agency exercise powers included in the Dodd-Frank Act to exempt certain classes of financial services providers—like credit unions--from new rules. “We encourage the Subcommittee to closely monitor the rules that the CFPB has under consideration and urge the Bureau to exercise this authority with alacrity,” West told members of the House Financial Services Subcommittee on Consumer Credit.
The credit union lobbying comes as the six-month-old consumer agency is taking over the consumer regulations once written and enforced by the Federal Reserve. All credit unions must comply with those consumer regulations, even as the new agency’s examinations will be limited to just the four credit unions over $10 billion in assets.
West, who is representing CUNA at this morning’s hearing, and Ed Templeton, president of South Carolina’s $600 million SRP FCU who is representing NAFCU, said credit unions are particularly troubled by a pending CFPB regulation to require comprehensive new disclosures on wire remittances. Both credit union executives suggested the new regulation, effective in February 2013, could drive credit unions out of the remittance market altogether, just as many credit unions have begun offering the service over the past few years.
Meantime, Templeton testified to a decrease in debit fees since last October’s enactment of the Dodd-Frank’s Durbin amendment of as much as two cents a transaction, which he attributed to the market conditions created by the new rule. He said that will cost his credit union about $300,000 in lost revenue this year.
The two executives also expressed concerns about pending CFBP rulemaking on mortgage disclosures and servicing, and a revisiting of requirements on credit card disclosure and overdraft protection passed by Congress just two years ago. “Battered by the volume of regulatory changes which have taken place over the last three years, credit unions are bracing for the next wave which will occur once the CFPB hits its stride,” said West.
Templeton said NAFCU hopes the CFPB will also take its mandate to reduce regulatory burden seriously. “If the CFPB and other regulators will not do this in a timely and effective manner,
Congress must step in and do so,” he said.
Rep. Carolyn Maloney, the Democratic congresswoman who helped write the credit card and overdraft laws, said the main function of the new consumer agency is to regulate non-financial institution players in the financial services markets, like payday loan companies, check cashers and remittance providers.
VyStar’s West urged the lawmakers to see that the CFPB uses the Dodd-Frank’s exemption clauses to protect credit unions and other smaller players in the market. “We have and will continue to strongly urge the CFPB to consider using its statutory authority to exempt from its regulations certain products or classes of financial institutions or establish transaction thresholds when appropriate. And, we hope the Subcommittee will do the same,” he stated.
This morning’s hearing is part of a continuing series held by the Financial Services subcommittee, which included field hearings at sites across the country, exploring regulatory relief for small credit unions and banks.
