The NCUA, which shares some of the responsibility with the Fed and other agencies for consumer protection, is working to ensure that it won't lose some of its powers if Congress approves President Obama's proposal to create the Consumer Financial Protection Agency.
While the credit union regulator hasn't taken a position for or against a new regulator, NCUA General Counsel Robert Fenner has some concerns. While he said he is pleased that the Obama administration wants to keep his agency independent-in contrast to a proposal put forth during the Bush administration-he wants to be sure that lawmakers and administration officials understand the NCUA's unique knowledge of credit unions.
"It's easy to understand their argument for a single regulator for financial services products, but we need to be careful on issues of interest to credit unions,'' he said during a discussion at NAFCU's Annual Conference. "We need to draw appropriate lines so we don't lose jurisdiction on issues unique to you.''
Fenner noted that some consumer protection issues are intertwined with those relating to safety and soundness, and the NCUA shouldn't lose its ability to ensure that credit unions operate safely and don't offer products that could negatively impact their financial health.
Another source at the NCUA said it was also concerned about staffing issues and whether the new agency would force the NCUA to cut personnel because its duties would be absorbed by the new agency.
NCUA Chairman Michael E. Fryzel has already announced that the agency's budget for next year will include funds for the creation of an Office of Consumer Protection.
NCUA Director of Public and Congressional Affairs John McKechnie said the agency doesn't want to discuss more specific concerns about the proposed agency until it outlines its views to House Financial Services Committee Chairman Barney Frank (D-Mass.) and his staff later this summer.
Frank's committee had been scheduled to mark up the bill creating the new agency last month but postponed the mark up until September because of the opposition of some financial services industry lobbyists and the rush of other business.
Last week he said that the new agency wouldn't stifle innovation by financial services providers. Rather, it would "lessen the chances for abuse.'' He also said the agency would centralize regulations, which would make them easier to comply with.
While the American Bankers Association and the Independent Community Bankers of America have come out strongly against the new agency, CUNA and NAFCU have taken a more nuanced view.
CUNA said it could support a new agency if it doesn't preempt the enforcement powers of the NCUA, is allowed to preempt state rules and is required to streamline and modernize consumer regulation.
NAFCU has floated a suggestion to exempt all depository institutions from the new agency's purview.
Neither CUNA nor NAFCU has joined the coalition of financial services trade associations that are working to defeat the proposal.