WASHINGTON — Consumer Financial Protection Bureau Director Richard Cordray made an appeal to credit unions on Tuesday, saying that the two share the same goals.
The industry and the agency have often found themselves at odds with each other—so much so that while speaking at the Credit Union National Association's Government Affairs Conference, Cordray joked the black-eye he was sporting was from a tussle with CUNA executives. (The shiner was actually from a basketball game).
More seriously, Cordray said, "Let me say as bluntly as I can that I believe credit unions and the consumer bureau have much ground in common."
In meetings with credit union executives, Cordray said they regularly tell him that "credit unions made consumer protection 'job one' long before our agency came to be" and added that he knows that "credit unions were not a culprit in the recent financial crisis."
However, the divisions between the CFPB and credit unions are still apparent. Credit union leadership has advocated that credit unions should be exempt from CFPB oversight, but Cordray said "I have considered their arguments carefully and I do not believe that is correct."
"The U.S. Congress had all of these suggestions in front of it when the Dodd-Frank Act was being written," Cordray said. "But Congress did not do that, and though it gave us some amount of exemption authority, it is not plausible to me that we could use such authority to override Congress's own judgment on such a broad-based policy matter."
House lawmakers recently sent a letter to Cordray urging him to do just that.
During his speech, Cordray did offer an olive branch, saying the agency can "customize our rules to treat smaller institutions differently in light of their compliance burdens and the level of risk they pose."
"We have done so and will continue to do so," but there are certain areas the CFPB is unlikely to give ground, he said.
One of them appears to be the "Qualified Mortgage" rule which Cordray said some have mocked as the "Quitting Mortgage" rule.
Cordray said some many in the financial industry predicted that QM would slash mortgage volume in half because of the higher costs and that no one would make a non-QM loan because of the litigation cost.
"The first set of mortgage rules have been in place for more than two years, and none of those pessimistic forecasts came to pass," Cordray said.
While technically correct, it is still early for Cordray to claim victory. Most mortgage loans do not go into default in the first three years, which would be the trigger for a foreclosure action and a lawsuit.
But Cordray accused a "cottage industry of lawyers and consultants" of fear mongering. "It is time to shrug off the naysaying consultants and lawyers who breed a culture of fear and hypothesized problems to hype their services."
— Kate Berry contributed to this article.
