The Small Business Administration’s Office of Advocacy cited CUNA information when urging a credit union exemption from the Consumer Financial Protection Bureau’s short-term, small-dollar loan proposal Friday. The agency filed its comment letter on the proposal Friday, saying among other things that the CFPB underestimated the impact that the proposal may have on credit unions.
“We thank the SBA Office of Advocacy for taking the time to listen credit unions' concerns and for reflecting them in their comment letter,” said Ryan Donovan, CUNA’s chief advocacy officer. “We hope the concerns related to the impact on credit unions and their members expressed by both the SBA Office of Advocacy and NCUA will carry significant weight as the CFPB moves to finalize the rule.”
SBA paid particular concern to the impact on credit unions noting that the CFPB needs to recognize the NCUA’s expertise in the area of credit unions and exempt small credit unions from the proposed rule.
It further noted that the proposed rule adds unnecessary complexity and new compliance burdens to consumer friendly credit union small dollar loans.
This is the first time since the CFPB has opened that the SBA Office of Advocacy has made strong critiques of a bureau proposed rule and questioned whether it is in the best interest of consumer's access to credit.
CUNA has been advocating on behalf of credit unions on this issue for several months.
In CUNA’s comment letter, filed Wednesday, it urged the bureau to withdraw the rule, or in lieu of this, provide a blanket exemption for credit unions. CUNA believes the rule’s substantial shortcomings could rob consumers of safe and affordable alternatives to predatory lenders.
The NCUA also wrote to the CFPB Wednesday, with Chairman Rick Metsger calling for a blanket exemption for the agency’s Payday Alternative Loan program.
For more information on the SBA’s letter, see CUNA’s Removing Barriers Blog.