Deyanira Del Rio, Board Chair of the $33 million Lower East Side People’s Federal Credit Union of New York City told the House Financial Services Subcommittee on Oversight and Investigations Thursday that her credit union has not been harmed in any way by Dodd-Frank. In fact, lending and profits have increased, she said.
The hearing was packed with witnesses friendly to conservatives, who oppose the CFPB and Dodd-Frank legislation. As a result, all witnesses except Del Rio testified how the bill’s increased regulations have caused burdens for their organizations.
Lynette Smith, CEO of the $87 million Washington Gas Light Federal Credit Union of Springfield, Va. also testified, telling a much different story than Del Rio. Smith said overall, the compliance burden is overwhelming for her credit union.
“We’re going to have to hire a full time compliance officer,” she told Rep. Jim Renacci (R-Ohio), who questioned her following her prepared testimony.
Renacci continued, asking Smith if she fears increased compliance costs will force her to increase fees to members.
“Yes, it could, down the road,” Smith said. “Credit unions have always been a lender of last resort. When I have members come to my office and I know they have no other place to go, I can provide them a loan in an hour, and I want to continue to do that. The next day, they’re bringing me cucumbers from their garden. That’s grassroots, that’s what credit unions do.”
Renacci then challenged Del Rio’s testimony about Dodd-Frank, saying, “You act like you have no concerns.”
Del Rio replied that her credit union complies with a wide array of consumer protections, and Dodd-Frank won’t add significant burden. Additionally, Lower East Side People’s FCU does not anticipate having to raise fees to cover the costs of compliance for new regulations.
“The majority of those pages don’t apply to us,” she said. “There will be some disclosures and reporting, but that’s much different than having to revamp your whole business model.”
Smith took the mic and countered Del Rio’s statement, saying, “A $34 million credit union may not have all the same services as an $87 million credit union. We’re trying to compete with the big banks.”
Del Rio attempted to respond, but Renacci said he was out of time. Later, when asked a question by Rep. Gary Miller (R-Calif.), Del Rio shot back, saying “we prioritize where and how to offset costs, and because we never became dependent upon high fees, we are not now scrambling to find how to make it up.”
Furthermore, Del Rio said, her credit union has been challenged by regulators and consultants to charge members more fees, but Lower People’s East Side prefers to earn revenue from loan interest income instead.
Rep. Michael E. Capuano (D-Mass.), in response to Smith’s testimony, said the hearing was the first he had heard about the burdens CFPB’s proposed remittance disclosure rule would have on financial institutions.
“I’m under the impression that this aspect has not been finalized, and I intend to look into it,” he said.