COLUMBUS, Ohio (2/12/16)--As part of its aggressive pursuit of regulatory relief for credit unions, the Ohio Credit Union League reached out to the Toledo Business Journal about the well-intended but detrimental effects of new Consumer Financial Protection Bureau (CFPB) rules.
The league explained that despite promises to “level the playing field” between regulated and unregulated financial product and service providers, the impact of nearly every CFPB rule to date has increased difficulty and expense for credit unions to serve their members.
The league’s efforts resulted in a lengthy article in the February issue of the Toledo Business Journal.
The article outlined how new qualified mortgage rules threaten the ability of some credit unions to offer mortgages to their members.
“The CFPB was created as a response to definite abuses in the financial system,” Barry Shaner, president/CEO of Directions CU, Sylvania, Ohio, told the Journal. “We’ve all seen those stories, and that’s why the agency was created. But, in its current form, even though there was some recognition of the fact that not everybody was involved in these abuses, everything that the CFPB propagates affects everyone in the financial services industries.”
Shaner maintains that his credit union, and indeed virtually all credit unions, didn’t engage in the abuses that the qualified mortgage rules were designed to address.
The article also describes the overwhelming effect of the Truth in Lending and Real Estate Settlement Procedures Act (TILA-RESPA) integrated disclosure (TRID) rule. Many smaller- to mid-sized credit unions are now faced with the difficult decision of whether they can continue to make mortgage loans to their members and make sure they are complying with all the new requirements.
Another issue is Regulation E, which relates to electronic funds transfers and international remittance transfers (IRTs). New regulations are intended to prevent remittance providers from taking advantage of consumers who send funds outside of the United States. Affected remittance providers are required to provide detailed disclosures before initiating the transfer for a consumer, including all fees and taxes and the foreign exchange rate that applies to the transfer.
Some credit unions have discontinued international remittance services entirely or made arrangements for a third-party provider to provide the services in cooperation with the credit union.
The article cited a Credit Union National Association survey of credit unions that offer or have offered IRTs since 2013. The survey revealed that nearly half of credit unions (49%) have either stopped offering IRTs (23%) and that a quarter turns members away (26%).