Credit union leaders from the national, state, and local stages shared the challenges of the regulatory burden on credit unions in a recent interview with the Illinois Business Journal.
Jim Nussle, CUNA president/CEO; Tom Kane, Illinois Credit Union League president/CEO; and Alan Meyer, CEO of 1st MidAmerica CU, Bethalto, Ill., detailed the effects of the Dodd-Frank Act.
Nussle explained that when Congress passed the Dodd-Frank Act it provided exemption authority, which fell to the Consumer Financial Protection Bureau (CFPB).
“In reality what the CFPB has done is it has lumped everything, including credit unions, into this when we were not part of the problem when the financial system almost collapsed in 2008,” Nussle said. “Congress assumed that credit unions would be exempted by the CFPB but they have not been and they have no rationale for not exempting us.”
Compliance costs have added about $223 million to the costs of Illinois credit unions which figures out to about $76 per person, Nussle noted.
“It’s $76 per member and we have 61,000 members,” Meyer said. “Do the math. That’s $4.6 million. For the sake of conversation, let’s say we agree that 75% of the regulation is needed. If 25% of it doesn’t protect or benefit members, there is $1 million we would save. In credit unions that money goes back to the members.”
Nussle said CUNA and America’s credit unions have been working with Congress to try to reform Dodd-Frank. Credit unions scored a big victory in June when the House of Representatives passed the CHOICE Act. The legislation includes several provisions that would make it easier for not-for-profit credit unions to more fully serve their members by reducing regulatory burden and balancing the regulatory scheme.
The CHOICE Act now goes to the Senate.
“We’re not advocating for the complete abolition of the CFPB but one of the key things we’re looking is giving the president the ability to remove the head of the CFPB. It is the only agency with a single, unaccountable administrator,” Kane said. “They get their money without congressional appropriation because they are allocated a percentage of the Federal Reserve’s budget every year, which we would like to change to give Congress control over the CFPB’s funding.”
Nussle stressed that CUNA is not calling for the elimination of Dodd-Frank. He cited CUNA’s Campaign for Common-Sense Regulation, which calls for communicating directly with both members and lawmakers about the regulatory burden and the need for relief.
“We believe there should be standards and regulations regarding financial services when people’s money is involved,” Nussle said.