McWatters to CFPB: Give Us Consumer Protection Authority Over Big CUs
NCUA Chairman J. Mark McWatters is asking the CFPB to cede consumer protection enforcement and examination authority for credit unions with assets of more than $10 billion and to give the NCUA primary authority over the institutions.
Six federally insured credit unions—Navy Federal Credit Union, State Employees’ Credit Union, Pentagon Federal Credit Union, Boeing Employees Federal Credit Union, SchoolsFirst Federal Credit Union, and The Golden 1 Credit Union—have assets of $10 billion or more, the NCUA said.
In a letter to CFPB Director Richard Cordray, McWatters said the change would not affect the CFPB’s rulemaking authority over federally insured credit unions and the bureau could still take action if it determined the NCUA was doing a poor job of enforcing consumer protection laws.
The Consumer Financial Protection Act of 2010 gives CFPB primary enforcement authority for consumer protection laws for institutions with assets of more than $10 billion.
“As not-for-profit, consumer-owned and -controlled financial institutions, FICUs serve a unique, positive role for consumers in today’s financial services marketplace. I believe that role can and should be distinguished from the role played by for-profit, investor-owned and -controlled financial institutions,”McWatters said in his letter.
Under the current regulatory regime, McWatters said that federally insured credit unions are subjected to two examinations and in the case of federally insured, state-chartered credit unions, three examinations.
That poses “unnecessarily burdensome costs” on federally insured credit unions, McWatters said.
He said that the impact that aggressive punitive fines have on “consumer/member owners of not-for-profit FICUs is particularly inequitable when compared to the impact such fines have on investor-owned, for-profit financial institutions.”
And he added that the total assets of the six FICUs pale in comparison to other financial institutions subject to CFPB examination and enforcement.
McWatters said the CFPB would retain its “exclusive rule-writing authority, secondary examination authority, secondary enforcement authority, and could continue to demand information and reports relative to those consumer financial transactions effected.”
In a May letter, McWatters asked the FPB to use its powers to exempt credit unions from certain agency rules, particularly mortgage reporting requirements.
He also asked the agency to issue clear guidance to credit unions concerning the CFPB’s use of its powers to take enforcement actions based on Unfair, Deceptive or Abusive Acts or Practices.
An NCUA spokesperson said Thursday that McWatters has not received a response to that letter.
The CFPB is under fire from many sides. The Trump Administration has called for as-yet unspecified changes to the agency’s powers and for the CFPB to be subject to the annual appropriations process.
In the House, Financial Services Chairman Jeb Hensarling’s (R-Texas) Financial CHOICE Act would greatly curtail agency powers. The House has passed that legislation.
A Texan, McWatters is Hensarling’s former counsel.
The Senate Banking Committee is working on bipartisan legislation that also could affect the agency.
And House Republicans have included provisions that could drastically cut the CFPB’s powers in their version of the FY2018 Financial Services appropriations bill.
The House has proposed CFPB changes in spending legislation in the past, but the Senate has not accepted them.