Credit union issues were addressed by House Financial Services Members and Consumer Financial Protection Bureau (CFPB) Acting Director Mick Mulvaney during his testimony before the committee Wednesday. CUNA sent a letter for the record of the hearing this week, outlining these issues and its vision for the future of the bureau.
Mulvaney made several statements that are consistent with CUNA’s vision for the CFPB, including that the bureau is continuing to focus on bad actors and that he is in favor of the bureau being funded through the appropriations process.
Mulvaney including that “regulation by enforcement is done,” after concerns that such methods are causing confusion and among credit unions and community banks, ultimately harming consumers they serve.
“It’s hard to do rules, but that’s the right way to regulate,” he said. “We intend to follow the Administrative Procedures Act which allows for notice and comment. We intend to go a little bit more by the book going forward.”
Rep. Brad Sherman (D-Calif.), asked Mulvaney if he intended to use the powers granted to the CFPB under section 1022 of the Dodd-Frank Act to exempt credit unions and smaller financial institutions from bureau rules.
“It wouldn’t be appropriate to saw we are or we aren’t, because we’re going to go through proper procedures [to make any changes], but in our notice seeing feedback on bureau activities, we intend to look at the bureau’s scope, indicating we’re going to look at exactly that issue,” Mulvaney said.
Rep. Roger Williams (R-Texas) also addressed the bureau’s authority under section 1022, including his bill that would exempt financial institutions with under $50 billion in assets from CFPB rulemakings.
Rep. Andy Barr (R-Ky.) questioned Mulvaney about the effect the bureau’s remittances rule has had on credit unions. He noted Fort Knox FCU, Radcliff, Ky., which is in his district, has been affected by the rule.
“The remittances rule created tremendous amount of paperwork for credit unions. Fort Knox Federal Credit Union has exited the remittances market because of additional costs,” Barr said. “This has made it harder for active duty personnel, especially those at Fort Knox who are deployed, it has prevented those servicemembers from executing those remittances through their credit union to their families.”
Mulvaney responded that he had “good news” for Barr.
“Part of statute requires us to do a five-year lookback on various rules, and remittances is one of those we are doing,” Mulvaney said. “We have requested information on exactly those points.”
David Scott (D-Ga.), said he has concerns with Mulvaney’s dual role as acting CFPB director and Office of Management and Budget director. Scott, who has introduced a bipartisan bill to put a bipartisan, five-member commission to lead the CFPB, said Mulvaney is a prime example of why a commission is needed.
“We do not need to have the management and protection of the financial transactions of Americans, changing every four years at the whim of changing administrations,” Scott said.
During the hearing, Mulvaney noted that he previously co-sponsored legislation to create a commission to lead the CFPB, and said such a structure is "preferable" to a single director.
Rep. Scott Tipton (R-Colo.) said he has heard from credit unions and community banks about the harm the one-size-fits all approach of Dodd-Frank has done and asked about CFPB tailoring of regulations.
“I don’t think anyone in this chamber would suggest community banks or credit unions were the cause of the financial crisis and should be treated the same as the large financial institutions, which in many circumstances is what we do, what Dodd-Frank and the bureau does,” Mulvaney said. “We need try very hard to fix that, to tailor regulations to size and sophistications of the entities we’re seeing.”
Rep. Keith Rothfus (R-Pa.) asked Mulvaney about the market uncertainty created by regulating by enforcement on a case-by-base basis, particularly when it comes to the CFPB’s unfair, deceptive, or abusive acts or practices (UDAAP) authority.
“I could use some legislative guidance on definition of ‘abusive,’ which is full of grey areas the way the statue is written now,” Mulvaney said.