3. Regulations. The Dodd-Frank Act transferred 17 consumer laws to the CFPB’s jurisdiction, including the Truth in Lending (TIL) Act, Truth in Savings (TIS) Act, Electronic Funds Transfer Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Real Estate Settlement Procedures Act (RESPA), and the SAFE Mortgage Licensing Act. This means NCUA will no longer have its own TIS or SAFE implementing regulations.
The CFPB also will have broad authority to prescribe rules to prohibit “unfair, deceptive, or abusive acts or practices”—terms Dodd-Frank defines broadly. Time will tell how, or if, the bureau will rely on this broad rule-making authority. The bureau is required not only to seek public comments but also to consult with NCUA and other federal agencies before finalizing any regulations under its jurisdiction.
While the bureau is permitted to exempt any category of financial institution (such as by asset size) from any of its regulations, it’s very unlikely that the bureau would ever choose to do so for any major regulation, deciding that a consumer deserves the same legal protections regardless of where consumers save or borrow.
This does not mean, however, that other credit unions can expect the bureau to be hands-off. The CFPB implementation team already has formally agreed with the state regulators to promote consistent examination procedures not only for banks but also for tens of thousands of “nondepository” financial service providers—including mortgage brokers, check cashers, payday lenders, finance companies, and debt adjustors—possibly under the CFPB’s jurisdiction. The CFPB will have to define exactly what “nondepository” financial entities will fall within its reach, including privately insured credit unions. Expect similar agreements on exam procedures with credit union regulators and federal banking agencies.
CFPB will have access to all examination reports, regardless of credit unions’ size or charter. This is another reason to expect consistent—and undoubtedly more detailed—consumer protection exams by NCUA and state regulators.
The law permits the CFPB to have its own examiners on a “sampling basis” accompany credit union examiners on examinations of federally insured credit unions with less than $10 billion in assets to assess compliance with consumer financial laws. At this point, no one knows what the CFPB examination corps will look like.
It’s unclear what enforcement powers the Federal Trade Commission (FTC) will continue to exercise regarding state-chartered credit unions. Today, the FTC is the enforcement agency for many major consumer protection laws—such as TIL and Equal Credit Opportunity—that apply to state-chartered credit unions (the FTC has never had staff who examine credit unions for compliance). The law instructs the CFPB and the FTC to reach some kind of agreement.