The NCUA—and not the CFPB—should enforce consumer protection laws at credit unions, trade groups told the bureau.

“Above all else, NAFCU maintains that federally-insured credit unions should not be subject to the Bureau's enforcement authority,” Ann Kossachev, NAFCU's regulatory affairs counsel told the agency, in commenting on the agency's role.

Under the control of Acting Director Mick Mulvaney, the CFPB has been soliciting public comment on virtually all of its activities.

Under federal law, the CFPB performs enforcement at credit unions with $10 billion or more in assets. That means the agency has jurisdiction over seven credit unions.

In July, NCUA Chairman J. Mark McWatters asked then-CFPB Director Richard Cordray to relinquish the bureau's supervisory responsibilities and allow the NCUA to perform them. Cordray did not take that action. Cordray resigned to run for governor of Ohio and Mulvaney took over as acting director. McWatters has been mentioned as a possible permanent agency head.

Meanwhile, the credit union trade groups agree with McWatters.

The bureau “can delegate its examination and enforcement over the seven largest credit unions to the NCUA, by exempting these credit unions” Elizabeth A. Eurgubian, CUNA's deputy chief advocacy officer and senior counsel, said in a letter to the CFPB.

She said that the NCUA is better equipped to regulate credit unions than the CFPB.

She added that if the CFPB decides to retain control over those credit unions, “then it must work together with the NCUA as a partner throughout the examination and enforcement process.”

In addition, the trade groups said that the agency should clarify the bureau's enforcement based on Unfair, Deceptive, or Abusive Acts or Practices.

“Since the creation of the Bureau, the industry has remained mystified as to what qualifies as a UDAAP violation, yet many enforcement actions have resulted from an alleged UDAAP violation,” Kossachev wrote.

“UDAAP should not be used as a 'catch-all' for the Bureau to enforce policies not required by laws or regulations,” Eurgubian wrote.

However, in a letter commenting on the bureau's enforcement duties, Christina Tetreault senior staff attorney with the Consumers Union, said the agency had been effective in stopping certain debt collection practices at Navy Federal Credit Union.

In 2016, the CFPB announced that the credit union would pay $23 million to members and a $5.5 million civil penalty for making false threats about debt collection to active-duty military service members, retired service members, and their families.

Tetreault said that the Navy Federal situation and others demonstrate that while prudential regulators may do an effective job of monitoring safety and soundness issues “the violations of consumer protection law that these CFPB enforcement actions uncovered demonstrate the importance of having a dedicated team of federal regulators focused solely on ensuring that those causing consumer harm are stopped, and appropriate legal or equitable relief is achieved.”

Instant Insights /

Let NCUA Enforce Consumer Protection Laws: Trades to CFPB

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