Mark McWatters, Chairman of the National Credit Union Administration (NCUA), recently sent a letter to the Consumer Financial Protection Bureau (CFPB) Director Richard Cordray asking that federally insured credit unions be exempted from CFPB oversight.
McWatters argues that the credit unions, as not-for-profit, and consumer-owned financial institutions, have a different role than for-profit, investor controlled financial institutions.
McWatters also says that the punitive fines that the CFPB uses for enforcement is “particularly inequitable when compared to the impact such fines have on investor-owned, for-profit financial institutions…the imposition of aggressive punitive fines on the very FICU credit union consumers that the CFPB is tasked with protecting ‘for the benefit of consumers’ is tantamount to imposing a ‘the beatings will continue until morale improves’ approach to consumer protection enforcement.”
The NCUA already regulates credit unions, McWatters adds, and has more enforcement tools at its disposal than does the CFPB, with the ability to go after affiliated parties, not just federally insured credit unions. He also explained that exempting federally-insured credit unions from the bureau's jurisdiction would allow the NCUA to "act as the primary agency responsible for the examination and enforcement of consumer financial protection laws for only six additional FICUs," which, he added, would free up resources for the CFPB.
The National Association of Federal Credit Unions (NAFCU) applauded McWatters’ letter.
“NAFCU – from the bureau's inception – was against the CFPB having direct oversight over credit unions and was the only financial services trade association to take that stance," said NAFCU President and CEO Dan Berger, in a prepared statement. "NAFCU and its members thank Chairman McWatters for making this request directly to Director Cordray."
In the event that Cordray does not want to move forward with exempting federally insured credit unions from the bureau's oversight, McWatters requested that the two agencies work together to conduct all examinations of those institutions jointly.