WASHINGTON – As legislation advances to create a Consumer Financial Protection Agency some lawmakers are questioning whether the exemption from the new agency proposed for most credit unions amounts to an exemption, after all.
“It seems as if it’s an exemption that isn’t really an exemption; a carve-out that isn’t really a carve-out,” said Rep. Scott Garrett, during last week’s debate over the measure that would exempt all but the largest 75 credit unions from being examined by the new consumer agency.
Garrett, one of the Republican members of the House Financial Services Committee opposed to the consumer agency, said the so-called exemption will not actually exempt credit unions or small banks from ultimate oversight by the new agency. “It really doesn’t get the job done,” he said.
“This is no exemption because the agency is going to write the rules and everyone will have to comply with them,” said Rep. Spencer Bachus, the Alabama Republican who is also opposed to creation of the new agency.
The credit union lobby, which is opposed to the so-called exemption because it would exclude the largest credit unions, agreed. Ryan Donovan, senior lobbyist for CUNA, noted that even if the provision is approved to have most credit unions examined by NCUA for compliance to consumer regulations those credit unions will still come under any new consumer regulations written by the agency. And the agency will have the ultimate authority to enforce consumer compliance.
Rep. Brad Miller, the North Carolina Democrat who wrote the exemption provision, conceded that even with his provision, the new consumer agency will have ultimate jurisdiction over credit unions. “The CFPA will still set the rules but existing regulators will do the consumer compliance exams,” he said.
The credit union lobby has withheld its support from the so-called exemption because it hopes to broaden it, either by bringing all credit unions under the language or giving more authority to NCUA and state supervisors to oversee credit unions’ compliance with consumer regulations.
The Financial Services Committee approved the exemption provision during debate last week and is expected to complete its work on the bill Wednesday, before sending it for a vote by the full House.
