Credit unions should not assume the District of Columbia CircuitAppeals Court's ruling against President Obama's National Labor Relations Boardappointments means the CFPB and its rules will meet the same fate,NAFCU President/CEO Fred Becker told Credit UnionTimes.

The Jan. 25 decision that invalidated those appointments, and inturn invalidated decisions made by the board since, set a precedentthat could potentially also invalidate Director Richard Cordray'sappointment and CFPB regulations finalized last year.

However, Becker said that while the CFPB gained authority overother financial service providers with Cordray's appointment, thebureau already had authority over depository institutions. As aresult, Becker said, CFPB rules that apply to credit unionsprobably aren't subject to being overturned in court.

“There is no chance credit unions can sit back and relax,thinking they won't have to comply with new CFPB rules from lastyear,” Becker said. “If I ran a credit union, I would not sit backat all, thinking there was a chance they could go away. Instead, Iwould prepare for them to be implemented on the dates the CFPB hasset.”

NLRB plaintiffs say the ruling was significant because itoccurred in the same court that is hearing the Cordray suit.

“(The NLRB ruling) will mean a lot in that court,” said JohnBerlau, senior fellow for finance and access to capital at theCompetitive Enterprise Institute. CEI is a co-plaintiff alongwith the State National Bank of Big Spring, Texas, which ischallenging Cordray's appointment.

That suit also alleges that CFPB rules and the resultingcompliance burden have forced the bank to discontinue products andservices like mortgage loans and remittances.

Berlau said should the administration appeal to the SupremeCourt as expected, all of the grounds of the NLRB suit may notsurvive. However, he added that he thinks the Supreme Court willplace limits on the President's ability to declare the Senate inrecess.

Becker said should the suit go to the Supreme Court, the highestcourt would clarify whether the CFPB already had authority overdepository institutions before Cordray's appointment, which woulddetermine whether or not credit unions could put up a legalchallenge.

However, Becker said he thinks the matter will be resolved outof court.

“I think it's 'let's make a deal' time,” Becker said in aninterview Monday. Republican lawmakers have been pressing forstructural change to the CFPB, such as replacing the singulardirector with a five-person board, making it easier for theFinancial Stability Oversight Council to veto CFPB regulations, andbringing the CFPB under the annual congressional appropriationsprocess.

Indeed, House Financial Services Committee Chairman JebHensarling (R-Texas) said Jan. 25 that the ruling is an opportunityfor reform at the CFPB.

Berlau said structural reform is a goal of CEI, because thebureau's “unaccountable structure” contributed to rules that extendbeyond the CFPB's authority and are unconstitutional.

“But, even with reform, we would still want those actionsvindicated in court,” he said.