WASHINGTON (12/4/15)--Consumer Financial Protection Bureau (CFPB) regulations fail consumers by making it harder for credit unions and other institutions to provide financial products and services, CUNA Chief Advocacy Officer Ryan Donovan said Thursday, firmly disputing recent statements by bureau Director Richard Cordray.
“Director Cordray told consumer advocates today that concerns raised by credit unions and others regarding the impact the bureau’s regulations have had on the availability of financial products and services have proven false. We firmly dispute this conclusion,” Donovan said.
“When a regulation makes it more difficult or more expensive for a credit union to serve its member-owner, the regulation has failed credit union members. When credit unions stop offering products because of regulation, leaving consumers’ only option large banks and less regulated non-bank providers, the regulation has failed consumers,” he said.
Donovan pointed to the CFPB’s international remittance transfer rule, which became effective in October 2013, as a regulation that has forced credit unions to withdraw a product from the marketplace over regulatory burden concerns.
“Almost half of the credit unions that offered remittance services prior to the regulation have either stopped offering them or purposefully limit the number they do because of the rule, forcing consumers to go to providers they need the most protection from. How can that possibly help consumers?” Donovan said.
“The bureau was created to make sure that financial products and services work better for the people who use them, but they’re failing to fulfill their mission by overregulating credit unions,” he added. “Increased regulatory burden has undoubtedly increased the costs of providing services. And, whenever the costs of providing services go up, less of them are provided.”
Donovan said that the bureau has “very wide latitude” to exempt any class of covered entity from its regulations.
“There is no doubt it is well within their authority to exempt not-for-profit, member-owned credit unions from their regulations,” he said. “But, the director and his staff have been very reluctant to use this authority, and their reluctance is costing consumers fuller access to safe and affordable financial services provided by financial institutions they own.”
Cordray’s remarks came from his address to the Consumer Federation of America earlier this week.