WASHINGTON — Sen. Elizabeth Warren (D-Mass.) lived up to her controversial reputation among credit unions, making a partisan pitch to CUNA Governmental Affairs Conference attendees to advocate on Capitol Hill for the Consumer Financial Protection Bureau and the confirmation of Richard Cordray during her Feb. 27 address.
The member of the Senate Banking Committee urged credit unions to use their political clout to tell members of Congress to stop re-litigating settled decisions, a nod to a recent District of Columbia appeals court ruling that declared President Obama’s National Labor Relations Board appointments unconstitutional. The ruling could set a precedent for another lawsuit in the same court that challenges the constitutionality of Cordray’s appointment and the Dodd-Frank Act.
It’s “time to confirm a director so the CFPB can create a safe harbor for your work so you can go about the business of serving your members. It’s time to move forward,” she said.
Warren said it felt good when she returned to Washington in January after a year and a half on the campaign trail to see the progress the CFPB had made. Warren led the original effort to set up the CFPB prior to its July 2011 debut.
However, that good feeling faded after a group of senators wrote to the President insisting that they would never confirm any director unless the basic structure of the CFPB was changed.
“Three years ago they fought for a weaker agency, and they lost that vote. Today, they know they still don’t have the votes to weaken the agency, and so they are determined to hold Rich Cordray hostage. Never before in American history has a minority in the Senate blocked a nominee to try to get changes in a law they don’t like and don’t have the votes to change,” she said.
Warren called Cordray a stellar director who has won praise from consumer and industry groups for his balanced and measured approach to rulemaking. She added that she doesn’t know how anyone could still be concerned that the CFPB would be an overly aggressive regulator. “Rich has been providing balance, creating space for credit unions and other small financial institutions to run their businesses and serve their customers without drowning them in regulations,” she said.
Warren also warned that the alternative to the CFPB’s rules would not include exceptions or safe harbors for credit unions.
“There are the more complex automatic default rules of Dodd-Frank, the risk of more litigation, the possibility of a free pass for the unregulated nondepository financial institutions,” she said, describing what would happen should the CFPB be eliminated. "We are back to automatic default Dodd-Frank rules that, unlike the QM ones, lack the exemptions for small financial institutions. I hope you listened closely to that: back to Dodd-Frank default rules that lack exemptions for small financial institutions.”
Warren also mentioned the $83 million Worcester Credit Union of Worcester, Mass., telling the story of a constituent who needed help refinancing her mortgage.
The consumer “believed she had a fixed-rate mortgage from a bank, but shortly after she separated from her husband, her payments doubled,” Warren said. “She tried to get a modification, but her bank sold the mortgage before the process was complete. Facing the immediate loss of her home, she turned to her credit union, and her credit union was there for her. Worcester Credit Union quickly helped her keep what she called ‘the only home her children have ever known’. Judy’s eyes filled with tears when she talked about her credit union, and, the truth is, so did mine.”
Credit unions have been a bright spot in the financial industry in an era of banking scandals, she said.
“Credit unions did not break this economy,” she said. “They did not build business models around tricking their customers. When the economy faltered, they did not turn their backs on the families and small businesses that needed them. On the contrary, credit unions worked hard to lead our economic recovery, responsibly and reliably providing credit to their members that need it.” Warren said she shares a common goal with credit unions, to build a level playing field and a consumer credit market that works for families, the financial services industry and the economy.