Those are the key reasons that CUNA and NAFCU are opposed to the legislation creating a Consumer Financial Protection Agency that the House Financial Services Committee passed 39 to 29 last Thursday.
Lobbyists for CUNA and NAFCU said they hoped to gain more favorable treatment for credit unions as the legislation moves forward in the House and the Senate.
"The legislation hasn't change much so far, and it doesn't address our concerns. The idea of a CFPA is intriguing if done the right way. This is the beginning of the process, not the end," said CUNA Vice President of Legislative Affairs Ryan Donovan.
NAFCU Executive Vice President of Government Affairs Dan Berger said that his association appreciates "the committee going after the bad actors, but some of their efforts spilled over to credit unions. Several committee members rightly pointed out that we didn't cause the crisis."
House Financial Services Committee Chairman Barney Frank (D-Mass.) has said he hopes the CFPA measure and other components of the regulatory restructuring bill will be considered by the full House before the end of the year. If the House passes it, it would then have to be considered by the Senate.
Credit unions and banks didn't get all that they wanted on the question of whether federal laws and regulations would preempt state consumer laws and regulations.
On a voice vote last Wednesday, the panel approved an amendment requiring financial institutions to comply with state consumer laws unless they get an exemption from their federal regulator.
Under the amendment, national banks would have to comply with state laws, even if they are tougher than federal laws and regulations, unless their federal regulator determines that the state law or regulation places the institution at a competitive disadvantage against state-chartered institutions.
Using powers given to it by the Federal Credit Union Act, the NCUA has previously preempted state lending requirements for federal credit unions.
Although the amendment doesn't mention federal credit unions, credit union trade groups continue to have some concerns about preemption issues.
Reps. Melvin Watt (D-N.C.) and Dennis Moore (D-Kan.) sponsored the amendment, which was a compromise between those who wanted to have no appeal process for having to comply with state rules (including the Obama administration and Frank) and financial institutions, which had sought a complete preemption.
But organizations representing state regulators, such as NASCUS, have fought hard to have as few exemptions to complying with state laws as possible. They contend that preserving state autonomy on these matters will result in stronger consumer protections. They have spoken of wanting a situation in which the federal rules "are a floor, not a ceiling," in terms of consumer protection.
But credit unions won a victory last Wednesday when the committee approved an amendment to exclude providers of credit insurance-including title and private mortgage insurance-from being regulated by the CFPA.
Under the amendment, sponsored by Rep. Gwen Moore (D-Wis.), the CFPA would be allowed to regulate the products but through the lender that sells the insurance to the consumer not through the insurer.
Credit unions had originally hoped for a total exemption, saying those products are already heavily regulated by states.
At the beginning of the markup, the committee approved an amendment that would exempt credit unions with less than $1.5 billion in assets and banks with less than $10 billion in assets from the examination by the CFPA.
The amendment, sponsored by Reps. Brad Miller (D-N.C.) and Dennis Moore (D-Kan.), would require those institutions to comply with regulations that the agency issues, but the examinations would be done by their safety and soundness regulator, though the CFPA could have a representative on the examination team.
CUNA and NAFCU said the exemption-or carve out-didn't go far enough. The trade association for community bankers said they were pleased with the amendment.
Donovan said it divides the credit union movement between smaller and larger financial institutions, and credit unions are such a small part of the financial services marketplace that they will only have clout if they stay united. He also said the asset size should be the same for credit unions and banks.
According to data compiled by CUNA, the 82 credit unions with assets of $1.5 billion or more represent 2% of all credit unions, but those institutions represent 33% of all credit union assets and 25% of all credit union members.
Berger expressed cautious optimism that the carve out will be expanded to all credit unions.
"There's a recognition that we didn't cause the problems that this agency is designed to address, and we will be talking to everybody involved to get that changed," he said.
Ever since the administration unveiled its proposal for the CFPA, the trades have taken different positions.
NAFCU wanted all depository institutions to be exempt from being examined by the CFPA and have all consumer examination done by safety and soundness regulators, such as the NCUA. NAFCU said it wanted a total exemption because it shouldn't have to pay for the sins of financial institutions by having additional compliance costs.
CUNA spelled out specific conditions that had to be met for it to support the measure. These included a preemption of federal law over state laws, giving credit unions the authority to decide what products are appropriate to offer their members and only requiring the collection of deposit data by census tract from institutions not required to provide that information to state or federal regulators.
While CUNA's position on deciding what products it could offer members prevailed in the version passed by the committee, the other two provisions it sought were not in the bill.
Lobbyists for the association said they wanted to take a more nuanced approach because it would differentiate them from trade groups that opposed by agency outright and would give them a place at negotiating table.