Inclusiv breaks from other credit union groups over CFPB structure

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In a break from other industry groups, Inclusiv, a trade association supporting community development credit unions, has shared its support for maintaining the Consumer Financial Protection Bureau’s current structure.

An amicus brief filed last week claims the bureau’s single-director structure is in line with the historical and constitutional practice of establishing an independent financial regulator.

Inclusiv was joined by Self-Help Credit Union, Hope CU, Hope Enterprise Corporation and the National Association of Latino Community Asset Builders. Changing the bureau’s structure now, they argue, would hamper the agency's independence and could have a detrimental effect on credit unions and others, particularly smaller organizations.

“The benefits of [the CFPB’s] consistency must not be achieved by marginalizing the needs and input of smaller institutions or institutions that offer consumers in underserved communities with alternatives to the large bank model,” Inclusiv and other credit unions said.

The brief also contends that the current set-up better protects the bureau from outside political pressures that other government agencies experienced in the run-up to the financial crisis. The CFPB, they argue, is already subject to sound accountability measures that allow both the public and regulated institutions to provide feedback to the regulator.

Inclusiv’s stance is unlike much of the rest of the credit union movement. Other industry groups have called for the expansion of the CFPB from a single director to a multi-member commission on the basis that it would improve the balance at the bureau by including multiple perspectives for decision-making.

In December 2019 the Credit Union National Association requested that the Supreme Court void the CFPB's structure, claiming “the single-director makeup of the agency exposes the CFPB to variances in ideology from one administration to another." The National Association of Federally-Insured Credit Unions has also pledged its support for reforming the bureau’s governance structure.

Credit unions have had a comparatively smoother relationship with the CFPB since its original director, Richard Cordray, stepped down in late 2017, but the bureau has still been a contentious issue for the industry. While many have called for credit unions to be exempt from all of its rulemaking, that feeling hasn’t been universal. Lower East Side People’s Federal Credit Union sued the Trump administration in 2018 over its handling of the agency.

CFPB Director Kathy Kraninger told congressional leaders last year that the bureau would stop defending its own structure after the Trump administration determined that structure was unconstitutional.

“The CFPB’s structure is constitutional and critical to ensuring that it can carry out its consumer protection mission free from undue political and industry influence,” Inclusiv said in the brief.

The Supreme Court will hear the oral arguments that are scheduled for March 3.

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