On the regulatory side, several CFPB rule-makings on CUNA’s radar coming into 2017 would have imposed numerous regulatory burdens on credit unions.
Leading up to the release of the agency’s short-term, small-dollar rule, many in the CFPB’s leadership—including former Director Richard Cordray—touted credit union lending efforts such as the Payday Alternative Loan (PAL) program as products consumers needed additional access to, rather than leaving them at the mercy of predatory lenders.
But the proposed rule swept in numerous consumer-friendly options. While PALs were technically exempt, it would have been difficult for most credit unions to fulfill the requirements to qualify for the exemption.
“Credit unions offering PALs or other similar loans faced additional burdens under the proposal that would have made it very difficult to offer those products, many of which result in financial losses for a credit union but are offered as a member service,” Dempsey says. “Those and other provisions had major potential for negative effects on access to credit for many Americans.”
Within three weeks, CUNA reached out to the CFPB, directly identifying these concerns before the official comment deadline. CUNA also approached NCUA with those concerns, outlining how PAL (overseen by NCUA) could be threatened.
CUNA’s 61-page commentary included a 21-page legal support letter addressing the rule’s shortcomings and suggesting potential revisions to ensure the rule didn’t harm consumers. In addition to expressing concerns to the bureau through letters, and face-to-face meetings, CUNA’s advocacy reach garnered support through other avenues.
Rep. Steve Stivers, R-Ohio, specifically cited CUNA’s concerns about the effect on access to credit during a July 2016 discussion on appropriations, as an amendment to a funding bill would have delayed the rule’s implementation.
The Small Business Administration’s Office of Advocacy also echoed CUNA’s position in its comment letter.
The final short-term, small-dollar rule that emerged in October 2017 addressed many of CUNA’s concerns in its 1,700 pages, and Cordray called CUNA President/CEO Jim Nussle to discuss the changes before officially releasing the rule.
“The CFPB listened to the numerous consumer protection concerns we raised in the 15 months between the proposal and final rule, and made changes that not only enable consumers to access safe, short-term credit but allow credit unions to offer those products without additional hurdles,” Dempsey says. “The sustained push from CUNA, leagues, and credit unions, not to mention other agencies that shared our concerns, played a major part in the substantive revisions we saw in the final version.”
While CUNA’s advocacy efforts secured vital changes to the short-term, small-dollar loan rule during the rule-making process, CUNA also maintained efforts to see changes in rules already finalized.
In 2015, the CFPB finalized its Home Mortgage Disclosure Act (HMDA) rule, which was especially burdensome for credit unions.
The Dodd-Frank Act requires mortgage lenders to collect and report certain data points. The CFPB’s final HMDA rule required nearly twice the amount of data points as Dodd-Frank, meaning credit union mortgage lenders would need to update systems, policies, and procedures to collect this information.
Since CFPB finalized the rule, CUNA, leagues, and credit unions participated in dozens of meetings with bureau officials and lawmakers to share concerns while advocating toward legislative solutions.
“The HMDA rule disproportionately penalized credit unions with additional requirements despite no evidence of wrongful conduct, making it more difficult for them to effectively participate in the mortgage lending market,” says Luke Martone, CUNA’s senior director of advocacy and counsel.
“This was a multiyear advocacy effort from the entire CUNA/league system to get relief from onerous HMDA reporting requirements that greatly exceed what Congress intended the bureau to collect when passing the Dodd-Frank Act,” he adds.
CUNA’s efforts continued through the end of Cordray’s term and as President Trump named Mick Mulvaney acting director. CUNA reached out to Mulvaney as soon as he took the agency’s reins.
Those efforts paid off at the end of 2017, as the CFPB under Mulvaney issued a statement that it would not impose noncompliance penalties for nonmaterial errors relating to data collected in 2018 and reported in 2019.
The bureau also announced it intends to use the rule-making process to reconsider changes to the 2015 HMDA rule, including the discretionary data points and tests to determine coverage of both institutions and transactions.
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