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Credit Unions Petition CFPB Director Cordray for Exemption

writing-on-paper1In response to Consumer Financial Protection Bureau (CFPB [1]) Director Richard Cordray’s testimony before Congress [2] Wednesday in which he defended the Bureau’s oversight of credit unions, National Association of Federal Credit Unions (NAFCU [3]) President and CEO Dan Berger wrote Cordray a letter Thursday asking the Director to exempt credit unions from certain rulemakings.

Credit unions have long argued that the CFPB’s regulatory oversight intended for larger financial institutions is making financial products more expensive for consumers due to increased compliance costs, and in many cases putting credit unions out of business. The NAFCU reported earlier this week that since the second quarter of 2010, more than 1,350 federally-insured credit unions have been lost, 96 percent of which had below $100 million in assets.

“NAFCU would like to reiterate our longstanding position with the Bureau that regulatory burden is the top challenge facing credit unions of all sizes today,” Berger wrote in Thursday’s letter. “While smaller credit unions continue to disappear from this growing burden, all credit unions are finding the current environment challenging.”

Earlier this week, a bipartisan group of 329 members of the U.S. House of Representatives [4] led by Rep. Steve Stivers (R-Ohio)—approximately three-quarters of the House membership—wrote a letter to Cordray on behalf of credit unions asking the Director to exercise his authority under the Dodd-Frank act to exempt credit unions from the certain CFPB regulations.

“NAFCU and our members believe that since Congress gave CFPB broad authority in Section 1022 of Dodd-Frank to grant exemptions on a rule by rule basis, the Bureau can and should do more to protect the credit union industry from excessive regulations,” Berger wrote Furthermore, earlier this week, 329 members of Congress wrote to you urging the Bureau to exercise its explicit congressionally authorized authority under Section 1022 to provide meaningful regulatory relief for credit unions to be exempt from certain rulemakings.”

The relationship between the regulator for credit unions, the Credit Union National Association (CUNA), and the CFPB has been a rocky one since the Bureau’s formation nearly five years ago, with CUNA claiming that credit unions should not fall under the CFPB's oversight because they did not play a role in the 2008 financial crisis. Cordray may have fanned the flames in February when he defended the Bureau’s oversight of credit unions and several of the Bureau’s mortgage-related regulatory changes, namely the Qualified Mortgage rule and the new servicing rules, in a public speech at CUNA [5].