WASHINGTON — A powerful credit-union trade group on Tuesday laid out its conditions for supporting the proposed Consumer Financial Protection Agency.
Credit unions and community banks, which hold considerable sway on Capitol Hill, are being courted by the Obama administration to support the new agency. Without credit union and small bank support, it could be difficult to push the proposal through Congress.
Credit Union National Association President and Chief Executive Dan Mica, in a letter to House Financial Services Chairman Barney Frank, D-Mass., said his group could support the agency if certain issues were addressed.
"In order for a CFPA to work, consumer protection regulation must be consolidated and streamlined; it should not add to the regulatory burden of those that have been regulated and performed well, such as credit unions.
The proposed agency would have broad authority to write rules governing a host of financial products and to ban certain financial-industry practices. Enforcement of all federal consumer-protection statutes would reside with the new agency, rather than existing bank regulators, under the administration's proposal.
The credit-union group said it would support the proposal if examination and enforcement remained with the industry's current regulator, the National Credit Union Administration. Rule-making could rest with the CFPA, the group said.
It also requested that the new agency's budget be funded entirely through federal appropriations. The administration has proposed a mix of appropriated funds as well as fees from the banking and credit-union industries.
The credit-union group wants the CFPA to have authority to preempt state laws - a tall order for consumer advocates and others who want states to have the power to go further than the agency.
And the group wants leeway to tailor its products to its members, rather than being required to offer "plain vanilla" products that other lenders would be required to offer by the agency.
"Any mandate that a generic product must first be offered before one that would work better for the consumer would increase costs for credit unions and could potentially confuse the members," Mica wrote.