Truliant FCU President/CEO Marcus Schaefer told lawmakers Tuesday that there is a need for the Consumer Financial Protection Bureau.
But he also warned that “seemingly small regulatory moves” can have unintended consequences on credit unions and other small financial institutions.
Schaefer said in testimony before the Senate Banking Committee that even though the NCUA and other regulators have increased their efforts to protect consumers it “makes sense to have a regulator that focuses on the consumer.”
Schaefer, who spoke about his credit union’s efforts to improve the financial awareness of its members, said he favors efforts to ensure there is clear language in contracts for financial products. He noted that his credit union’s approach is “consumer be aware, not consumer beware.”
In response to a question from Chairman Tim Johnson (D-S.D.), Schaefer said he hopes the bureau will have a director in place so it can begin its oversight of payday lenders and other non-bank providers of financial services.
“The sooner the CFPB can get to the task of monitoring and regulating non-bank entities the better,” said Schaefer, whose Winston-Salem, N.C.-based credit union has assets of $1.5 billion and 178,000 members.
He also said improving consumer protection should be “not a one-time fix but an ongoing effort.”
The CFPB, which was created by last year’s financial overhaul bill, is scheduled to begin operating on Thursday. Former Ohio Attorney General Richard Cordray has been nominated as its first director, pending Senate confirmation.
Unlike other witnesses at the hearing, including Albert Kelly, president/CEO of Oklahoma’s SpiritBank on behalf of the ABA, Schaefer didn’t take a position on legislative proposals to change the structure of the bureau.
But Sen. Richard Shelby (R-Ala.), the panel’s top Republican, reiterated the commitment of Senate Republicans to block the confirmation of any director until the Obama administration makes some changes to its structure, including having it overseen by a five-member panel.
Schaefer agreed with Shelby’s position as did attorney Andrew Pincus, testifying on behalf of the U.S. Chamber of Commerce.
Pincus said the existing structure of the bureau doesn’t provide the proper checks on the CFBP’s powers.