Credit union, bank groups trade shots over CFPB supervision of big CUs

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Credit union and bank trade groups are engaged in yet another spat, this time regarding oversight by the Consumer Financial Protection Bureau.

Only nine credit unions meet the $10 billion-asset threshold for CFPB supervision, but a recent letter from Jim Nussle, president and CEO of the Credit Union National Association, called on the bureau to delegate all CU supervision to the National Credit Union Administration. Citing credit unions’ cooperative roots, member-owner structure and history of consumer protections, Nussle argued that the bureau should focus on regulating more problematic institutions, pointing out that less than 1% of all consumer complaints to the bureau have related to credit unions.

A joint letter from the American Bankers Association and Consumer Bankers Association attempted to quash Nussle’s argument.

“The credit union industry is not small, special or immune to the consumer risks the bureau is charged by Congress to address,” the bank trades wrote, noting that more than 300 CUs hold assets of $1 billion or more, and in total are larger than 88% of U.S. banks. Beyond that, they added, the nine CUs with assets exceeding $10 billion – including Navy Federal Credit Union, which recently became the first credit union in history to surpass the $100 billion mark – are all in the top 1% of depository institutions.

The two bank groups argued that the National Credit Union Administration – which currently already oversees the institutions in question – is unfit to supervise such large credit unions on account of a history of reports from the agency’s own inspector general and the U.S. Government Accountability Office that were “sharply critical of the adequacy of NCUA supervisory procedures and the competency of NCUA examiners."

If Congress didn’t want the bureau to oversee credit unions, ABA and CBA added, it would have explicitly excluded them from the legislation that created the bureau.

The National Association of Federally-Insured Credit Unions shot back Tuesday, with President and CEO Dan Berger pointing to billions of dollars in fines the CFPB has levied on big banks since its inception.

“It is not surprising that the trade associations that represent entities such as Wells Fargo would want the CFPB preoccupied with examining credit unions, while their member banks have continued to abuse consumers even after the enactment of the Dodd-Frank Act,” Berger wrote.

He added: “If the ABA and CBA truly had consumer protection in mind, they would focus on preventing consumer abuses by their members instead of targeting member-owned not-for-profit credit unions.”

Ryan Donovan, chief advocacy officer at CUNA, said the letter suggests “there is equivalency in how consumers are treated by credit unions and their too-big-to-fail Wall Street banks.”

The National Credit Union Administration did not respond to a request comment in time for deadline.

The credit union industry has had a conflicted relationship with the CFPB since its early days, arguing often that CUs were providing consumer protections long before the bureau began and did not contribute to the financial crisis, so should be exempt from its oversight and rulemaking. After a rocky relationship with original director Richard Cordray – and, to a lesser extent, with his successor Mick Mulvaney – CUs have largely been comfortable with recently installed Director Kathy Kraninger, though many in the industry continue to argue against the bureau’s structure, pushing instead for a multiperson bipartisan commission.

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