Consumer Financial Protection Bureau Director Rohit Chopra joined CUNA President/CEO Jim Nussle on stage Monday at the CUNA Governmental Affairs Conference (GAC) in Washington, D.C. Chopra visited CUNA GAC just hours after the U.S. Supreme Court agreed to hear a lawsuit challenging its funding mechanism.
“We’re very pleased the Supreme Court is reviewing the 5th Circuit’s decision. At the end of the day, we want there to be certainty about rules that were written 10 years ago, safe harbors put into place,” Chopra said. “We don’t want a situation where financial institutions all over the country are getting sued because of a lack of clarity of actions. I’m hopeful this is the next step to create that clarity, and we’ll let the process move forward.”
Chopra praised credit unions’ style of relationship banking and urged them to highlight their differences to policymakers.
“You’re already facing disadvantages compared to larger players on capital markets issues and a whole host of issues,” he said. “You need to level the playing field by creating and advocating for a regulatory structure that recognizes some of those differences.”
Chopra pointed out that credit unions generally don’t build a credit card program through “late fee harvesting,” he said, adding that there are differences in how the CFPB approaches large institutions.
Nussle pointed out that costs are becoming “insurmountable” for many community financial institutions, and said several of the CFPB’s actions, including recent actions to crack down on so-called “junk fees,” will affect many of the standard fees credit unions use to cover costs.
“Just to offer the program, the fees that are being discussed—but also being labeled junk fees in many instances—those are not covering costs for fraud, processing, security, things like that, in many instances,” Nussle said. “That’s the challenge: How do we pay for this and still provide the access we all want when costs are rising and the fees—whether you want to call them junk or not—aren’t covering costs?”
Chopra encourages credit unions and boards to look at their fee prices compared with competitors, look at “why they might be receiving complaints, or why they must be more dependent [on fees],” and also look at what can be considered a “service” and what isn’t.
“There are places where you’re providing a legitimate service and you should be compensated for it,” he said.
Nussle asked how the CFPB is approaching fintechs and other new industries that often fall between regulatory cracks.
“You can’t just have banks and credit unions subject to the rules, and not everyone else. When it comes to mortgage companies, loan servicers, so many others, they might not even have any federal laws,” Chopra said. “Our first focus is on the repeat offenders. For non-bank companies that have engaged in a consumer protection violation, we’re proposing that we file that so we can keep an eye on that to prevent repeat offenses.”
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