Inside the Dodd-Frank Legislative Debate
CUNA fought to maintain an independent regulator for CUs.
Ryan Donovan, CUNA's vice president of legislative affairs, discusses CUNA's concerns during the Dodd-Frank legislative process. One of CUNA's priorities, according to Donovan, was to maintain NCUA as the independent safety and soundness regulator and insurer for credit unions. Listen now.
What were CUNA's legislative goals as Congress set about to reform the financial system?
CUNA approached the regulatory restructuring debate with the assumption that a bill was going to become law, says Ryan Donovan, CUNA's vice president of legislative affairs.
"Congress was going to pass a bill responding to the greatest financial crisis since the Great Depression," he says. With that stipulation, CUNA sought to maintain NCUA as the independent safety and soundness regulator and insurer for credit unions and to minimize the adverse impact the other provisions of the legislation would have on CUs.
CUNA focused on these different areas as the debate over Dodd-Frank moved through Congress:
* Examination and enforcement. In the administration's original proposal, all credit unions would have been supervised and examined by the new Consumer Financial Protection Bureau (CFPB). CUNA's concern was that the CFPB should make the rules for consumers but examination and enforcement should be retained by the prudential regulator. Final rule: NCUA retains exclusive authority over credit unions with $10 billion or less in assets.
* "Plain vanilla" products. The original proposal would have required credit unions and banks to offer consumers a "plain vanilla" financial product before any others that might better meet their needs. CUNA believed the bureau shouldn't stifle competition or innovation. Final rule: No "plain vanilla" product requirement.
* Agency funding. CUNA didn't think credit unions had to pay for the new bureau because credit unions weren't the culprits or targets of the bill. Final rule: The CFPB is funded by proceeds from the Federal Reserve.
* Regulatory burden. One thing CUNA liked about the new agency was the potential for synergy in the rulemaking process. Final rule: Includes a provision CUNA helped draft that directs the bureau to address rules that are unnecessary and outdated.
In addition, CUNA maintained concerns that credit unions have sufficient representation during the CFPB's rule-making process. The final rule creates a Financial Stability Oversight Council, which includes all financial institution regulators. The council can nullify any regulation with a two-thirds vote if it believes it's unsafe or unsound.
CUNA also worked hard to ensure the CFPB didn't have regulatory authority over the Community Reinvestment Act (CRA), as some suggested during the Dodd-Frank debate. "Credit unions aren't subject to CRA, and nothing in the final rule includes CRA oversight," Donovan explains.