WASHINGTON – The House Financial Services Committee has scheduled a key vote later this week on a bill to create a Consumer Financial Protection Agency, which will have broad authority over products and services for credit unions, as well as banks, insurers and investment companies.
Despite efforts by the credit union lobby to steer clear of the new regulatory initiative, credit unions are widely expected to come under the new scheme, and, in fact, will have a seat on the agency’s oversight board, under the proposed legislation. "In terms of exemption, I don’t think that is very likely. What may be more likely is there may be some accommodation made on a number of issues," said Ryan Donovan, senior lobbyist for CUNA.
Credit union lobbyists are working to limit the industry’s exposure to the bill by working for a provision that would have a credit union’s existing regulator examine it for compliance with consumer laws and regulation–as well as for safety and soundness; by having a single rule for all entities regulated by the new agency pre-empt all state and local consumer regulations; and by removing credit life and credit life disability products from the jurisdiction of the new regulator.
Still at issue is how the new agency will be financed. Lawmakers have pledged funding from the Federal Reserve without raising existing examination fees paid by credit unions, banks and others.
NAFCU is continuing to press its own proposal to exempt credit unions and banks from the new regulator by creating an office of consumer protection in each of the existing regulators that would monitor their compliance with consumer regulations. But that proposal does not seem to have much support in Congress. "We continue to believe that NCUA should have the authority to oversee credit union compliance with consumer laws," said NAFCU President Fred Becker. ":As you know, credit unions are already the most regulated of financial entities."
CUNA’s Donovan said this week’s vote represents the last major chance for credit unions to shape the House bill, which is expected to be combined with as many as 10 other financial services bills once it moves over to the Senate. "This is our best opportunity to publicly affect this legislation," he told The Credit Union Journal yesterday. "Once it moves over to the Senate it will be merged into an omnibus bill, giving us less chance to affect it."
