As New Congress Convenes, CU Trades Paint Target on CFPB
As congressional Republicans attempt to loosen federal regulations, credit union trade organizations are urging them to paint a target on one particular agency: the CFPB.
With the 115th Congress convening this week, both trade groups outlined their legislative goals for the next two years.
“Congress should enact legislation to clarify that credit unions are exempt from CFPB rules unless the CFPB demonstrates credit unions are causing consumer harm,” CUNA President/CEO Jim Nussle, said in a letter Monday to members of Congress.
NAFCU agreed, but said that the agency should use the authority it already has to exempt credit unions from its rules.
“NAFCU will continue to press the CFPB to use its authority under Section 1022 of the Dodd-Frank Act to exempt credit unions from its regulations,” the trade group said in its own legislative wish list.
And while the CFPB received a tremendous amount of criticism from both groups, NAFCU made it clear that its top legislative priority is ensuring that credit unions retain their tax-exempt status.
“While no member of Congress has proposed eliminating the exemption, this issue could get a fresh look with new eyes under a new Republican administration and Republican-controlled Congress,” NAFCU said.
Congress is likely to try to tackle comprehensive tax reform and the tax exemption could receive a fresh look from tax legislation writers.
Republicans on both sides of Capitol Hill also are likely to attempt to enact changes in the regulatory framework governing credit unions. The House has passed such changes in the past, but many of them stalled in the Senate.
Although President-elect Trump has placed a high priority on such efforts, opponents such as Sen. Elizabeth Warren (D-Mass.) and Senate Banking ranking Democrat Sherrod Brown (D-Ohio) are likely to construct roadblocks to those attempts.
Democratic senators could use Senate rules to force a 60-vote majority for passage of such legislation—a daunting threshold.
Nonetheless, the credit union trade groups are seeking relief from agencies and regulations they find oppressive.
“We welcome the opportunity to work with Congress and the Trump administration to promote a positive business environment that will allow credit unions to succeed and help our nation’s economy to prosper,” NAFCU President/CEO Dan Berger said.
Too often the CFPB has applied a “one-size-fits-all” approach in regulating financial institutions, CUNA said.
“The very regulations aimed at reining in the abuses of Wall Street banks and other abusers of consumers are slowly but surely robbing consumers of Main Street financial services,” Nussle wrote.
And both groups called for structural changes to the agency.
They called on Congress to convert the CFPB from an agency governed by a single director to one that consists of a five-member commission.
Nussle also said in the letter that the CFPB has used its Unfair, Deceptive and Abusive Acts and Practices power as a broad tool to issue rules that conforms to its ideological goals, adding that Congress should repeal that authority.
CUNA also called on Congress to force the CFPB to fix or withdraw mortgage rules the association believes are burdensome.
Both groups said that they will be closely watching the CFPB’s final rules governing payday lending to ensure that they do not unfairly burden credit unions that are attempting to offer alternatives to payday lenders.
In addition, NAFCU identified repeal of the Durbin amendment governing credit card fees and data security standards for merchants as other high priority legislative goals.