NAFCU Calls on Financial Stability Council to Void CFPB Rules
NAFCU is asking the Financial Stability Oversight Council (FSOC) to step in and void new regulations issued by the CFPB.
In a letter to Treasury Secretary Steven Mnuchin NAFCU President/CEO B. Dan Berger requested that FSOC use its authority under Dodd-Frank to stay or void CFPB rules that it decides are harmful.
“This authority could spur renewed dialogue between the bureau and the federal banking agencies regarding rules that may actually pose systemic risk to the financial sector,” he said, in his letter.
Under Dodd-Frank, an FSOC member may petition the council to void a new CFPB rule that may “put the safety and soundness of the United States banking system or the stability of the financial system of the United States at risk.”
The petition must be filed within ten days of the rule’s publication in the Federal Register and the petitioner must have attempted to address the concerns with the CFPB.
Mnuchin would have the authority to place a stay on the rule until FSOC discusses it.
It would take a two-thirds vote of the council to issue a further stay or to void the regulation.
Berger pointed out that for the first time, FSOC’s agenda will be set by someone who belongs to a different political party than the CFPB director.
Mnuchin, a Republican, is chairman of FSOC; CFPB Director Richard Cordray is a Democrat.
The other members of the council chairmen of the financial regulatory agencies, including the NCUA and the CFPB.
In an executive order, President Trump also has asked FSOC to closely examine the regulatory burden places on financial institutions by Dodd-Frank.
“Although some credit unions are exempt from the supervision of the Consumer Financial Protection Bureau (CFPB), they still have been improperly ensnared in a regulatory net that was not intended for them,” Berger said, in his letter.
Berger said that the CFPB should be cognizant of NCUA’s role as the primary regulator of credit unions.
And he singled out several CFPB rules that he said pose a significant regulatory burden for credit unions. Those include the CFPB’s proposed rules governing binding arbitration agreements and payday lending.
In addition, he said, the CFPB should be required to provide greater clarity concerning enforcement actions based on allegations of unfair, deceptive or abusive acts or practices. He also cited the agency’s consumer complaint database as a problem since the complaints are made public without being properly vetted.