Credit unions are unique in the financial world. Rarely do youfind a financial institution that clearly and emphatically says itis not working for a profit.

At the Consumer Financial Protection Bureau, we like that thefocus of your business model is excellent customer service. Thismodel allows people to help other people by providing high-qualityfinancial services to the credit union members. With tens ofmillions of members and thousands of locations in this countryalone, credit unions are indeed fulfilling their mission ofservice.

To pilot a prototype credit card agreement, we have been workingwith one of the largest credit unions in the country, PentagonFederal Credit Union. As part of our “Know Before You Owe”campaign, we released a simplified agreement that is short, writtenin plain language, and explains the key features. Pentagon FCU hasmore than one million members and 350,000 cardholders, so we arevery pleased to be running our pilot program with them.

One of our core beliefs at the consumer bureau is that honestbusinesses will benefit when those that cheat or mistreat theircustomers are held accountable. We want all financial institutionsto have the same kind of accountability, and to operate by makingcosts and risks clear to their customers up front. Opaque, back-endpricing is confusing to consumers who then get hit by hidden feeslater. That is not right. Those kinds of tactics, along with otherharmful practices, are what got us into this financial mess.

Going forward, the new consumer bureau has an important role toplay in ensuring that the recent and profound financial crisis doesnot happen again. Before the crisis hit, for example, only part ofthe multi-trillion-dollar mortgage market was subject to federaloversight. We have seen how that turned out. Bad practices droveout the good. We firmly believe that had the bureau been in placeten years ago, the crisis would have been averted.

We now have the ability to examine participants in both thedepository and non-depository segments of the mortgage market. Weare working to level the playing field for all market participantsin order to clean up bad practices and various forms of unfaircompetition.

So, we are here to implement reasonable regulations. Under thelaw, other than large credit unions with assets over $10 billion,we do not enforce the law against credit unions, and we do notexamine credit unions. But we do write rules that can affect thecredit unions. Over the next year, the bureau will be implementingnew mortgage standards that Congress specifically required us toadopt in the Dodd-Frank Act.

One of our most important rulemakings will implement a newstatutory requirement that lenders make a good faith and reasonabledetermination that a borrower can repay the mortgage. Other rulesthat address mortgage origination will implement statutorystandards for loan originator compensation and the origination ofhigh-priced mortgages.

On all of these fronts, we need to return to traditionalprinciples of underwriting and sound customer service. Ourprincipal goal in implementing the law is to improve thefunctioning of consumer financial markets and help ensure thatindividual consumers are not steered into loans they do notunderstand or cannot afford.

A number of new statutory provisions address mortgage servicing,covering topics such as new disclosure requirements, force-placedinsurance, the crediting of payments, and error resolutionrequirements. Here, our principal goal is fair treatment ofborrowers.

As we develop these initiatives, we are intent upon keepingeveryone’s concerns in mind. We know that one size does not fitall. Where it makes sense to treat smaller institutions differentlyfrom larger ones, we have pledged to consider doing so. We alsowant our regulations to be more accessible. We plan to highlightthe key points for small providers, which do not have the same armyof compliance officers that are on staff at the very largeinstitutions. We know that is simply not feasible. Nor should itneed to be.

At the consumer bureau, we understand that credit unions did notcause the financial crisis. As we work to clean up the mess thatthe crisis created, we must be mindful of the fact that creditunions were among those harmed at every step along the way: by themortgage frenzy, by the ensuing credit crunch, and by the deeprecession that cratered our local economies.

Credit unions deserve a fair marketplace where their model ofsteadfast customer service and concern for long-term relationshipscan succeed. That model is just as sound today as it ever was, andwe embrace it.

In my hometown, and in hometowns across this nation, manymillions of Americans depend on credit unions every day. This isabout far more than mere economics. It is about human beingsdepending on one another.

When people entrust a credit union with their money and withtheir critical financial transactions, they are entrusting you withtheir hopes for the future and with the claim they are staking tothe American Dream. We want you to continue to inspire and fulfillthe hopes of all the people you serve. 

Richard Cordray is director of the Consumer Financial ProtectionBureau
Contact 202-435-7000 [email protected]