While credit unions support efforts to rein in high-cost loan products that aren’t consumer-friendly, it warned against overly prescriptive rules that could hamper availability of safe and affordable credit union products. CUNA wrote to a House subcommittee this week for its hearing on ways certain bad actors evade consumer protection laws.

“We acknowledge the presence of some harmful products in the small dollar market and support sensible efforts to rein in these high-cost loans. However, we caution Congress and federal regulators against haphazardly establishing rigid restrictions on all lenders that would likely result in the diminished availability of fair and reasonable credit options from local credit unions. 

CUNA’s letter notes that credit unions, due to their member-owned structure, are a pro-consumer alternative to high cost loans. It also highlights that credit unions are effectively regulated by both state and federal laws, including interest rate caps that allow credit unions to offer short-term loans that are generally 400% lower APR than those made by payday lenders.

The Consumer Financial Protection Bureau’s short-term, small-dollar loan rule is an example of a rule that could hinder access to credit, CUNA notes, as CUNA members believe “the rule does not strike a suitable balance between enhancing consumer protection and ensuring credit unions are able to continue serving their members.”