Assistant Treasury Secretary Michael Barr told lawmakers today that the proposed agency to regulate financial products would help credit unions and not add more regulation.
"Closely regulated credit unions and community banks with straightforward credit products struggle to compete with less scrupulous providers who appear to offer a good deal and then pull a switch on the consumer," Barr told the House Subcommittee on Commerce, Trade and Consumer Protection. He said the new agency will level the playing field by putting "an end to regulatory arbitrage and unregulated corners that inevitably weaken standards across the board."
He also dismissed concern that the Consumer Financial Protection Agency would increase the burdens on financial institutions that are already heavily regulated.
The agency is "not a new layer of regulation; it will consolidate existing regulators and authorities. This will bring efficiencies for the industry."
The credit union trade associations have taken different approaches to dealing with the proposal.
CUNA has expressed concern about some aspects of the plan but also noted that there could be some advantages to it. Overall, they are taking a wait-and-see approach.
NAFCU has proposed exempting all depository institutions from the agency's purview and suggested that NCUA create a separate consumer protection office. NCUA Chairman Michael E. Fryzel said he would include funding for such an office in the agency's budget for next year.
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