CUs need more dialogue, attention on reg. burden, Nussle tells Cordray

March 23, 2016

WASHINGTON (3/23/16)--The Credit Union National Association (CUNA) would like to see more dialogue and attention from the Consumer Financial Protection Bureau (CFPB) directed at the concerns of credit unions, CUNA President/CEO Jim Nussle wrote to bureau Director Richard Cordray Tuesday. Responding to Cordray’s appearance before the U.S. House Financial Services Committee last week, Nussle specifically brought up concerns about what he called “the troubling rate of attrition” among small credit unions.

“If a regulation results in credit unions--which you have acknowledged are not the problem--providing fewer safe and affordable financial services to their members, then why not tailor the rules to avoid this result, particularly in light of the authority and direction Congress has given the Bureau concerning exemption authority?” Nussle wrote. “Again, we are not asking for ‘no regulation;’ we are heavily regulated, and are simply asking for the ability to continue to serve our members in the consumer friendly way we always have.

“We believe this is achievable using the exemption authority Congress has conveyed and encouraged the Bureau to use,” he added.

Nussle cited CUNA’s groundbreaking regulatory burden study, which shows that the financial impact on credit unions has increased by 40% since 2010. For three quarters of credit unions with assets below $100 million, regulatory costs rose from 0.78% of assets in 2010 to 1.12% of assets in 2014, an increase of 43%.

In addition, 2014 and 2015 are among the top five in terms of attrition rates since 1970, at 4.2% and 4.1%. Attrition rates at smaller credit unions have been especially high. In both 2014 and 2015, the attrition rate at credit unions with less than $25 million in assets (half of all credit unions are of this size) has exceeded 6%.

“There is an indisputable connection between both the dramatically higher regulatory costs incurred by small credit unions and the increases in those costs since 2010, and their higher attrition rates,” Nussle wrote.

Nussle also extended an open invitation to the bureau to be briefed about CUNA’s research and statistics in greater detail.

“We welcome the opportunity to speak with you and your staff to brief you on the recent data we have collected regarding the regulatory burden on credit unions. Such a briefing may bring more appreciation for our concerns,” he wrote. “Additionally, we renew our invitation to you to spend a day with a credit union to better understand their compliance burdens and how CFPB rules impact day-to-day operations, as well as members.”