The Financial CHOICE Act gives Congress an opportunity to provide credit unions with relief from the regulatory scrutiny of the Consumer Financial Protection Bureau (CFPB), Diana Dkykstra, president/CEO of the California and Nevada Credit Union Leagues wrote in an opinion-editorial published in the East Bay Times.
The additional regulatory burden created by the CFPB is an unintended consequence of the 2010 Dodd-Frank Act, Dykstra wrote.
“Congress was not wrong to establish the CFPB,” Dykstra wrote. “However, it is time to talk about why credit unions--which provide affordable savings and credit to 110 million account holders across the U.S., including 10.9 million of them in California--need relief from this agency.”
Dysktra explained that while the bureau was created to protect the consumers from unscrupulous lenders, it has instead adopted a one-size-fits-all approach that negatively impacts community lenders.
She provided several examples of how the CFPB has created processes created circumstances that run counter to its mission. For example, a CFPB rule requires a complicated hour-long procedure to wire money, a process that previously took 15 minutes. The bureau exempted financial institutions that handle less than 100 transfers per year.
The new lengthy process caused many credit unions to stop providing international remittances because it drove the cost per transaction up to $40. As credit unions were forced to retreat from that market, consumers were driven to seek out predatory lenders.
“Credit unions were founded on the principles of serving, protecting, and educating their members about fair and quality financial services,” Dykstra wrote.”Wall Street does not deserve a break and since the CFPB has turned a deaf ear to Main Street concerns, Congress should, at minimum, strengthen the CFPB’s authority to exempt true and honest community lenders from these regulations intended for Wall Street. Let’s assure hard-working Americans a viable local choice.
“After all, credit unions were created in the first place to protect consumers from abusive lenders, and we have a century long track record that shows we are extremely good at doing exactly that.”