CFPB rulemakings should target industry problems

February 6, 2020

A bipartisan commission at the Consumer Financial Protection Bureau (CFPB) is essential to preserving its independence, CUNA wrote to the House Financial Services Committee Thursday. The committee heard semi-annual testimony from CFPB Director Kathy Kraninger Thursday.

“The current structure—with a single director—gives too much authority to one person and does not provide meaningful oversight and accountability. It ultimately fails consumers,” the letter reads. “First, it disrupts consumer protection and functioning markets in an interest to achieve a political agenda that suits the party of the president; second, it produces frequent and severe changes in policy that increase costs of compliance that are generally passed on to consumers in the form of higher interest rates and fees, making credit and services more expensive and less available, particularly to vulnerable borrowers.

While entities that must comply with the ever-changing regulatory perspective that the Bureau’s structure produces may have a loud voice, be assured that the consumers the Bureau was intended to protect are the ones who pay the ultimate price of this misguided structure,” it adds, also noting that then-President Barack Obama and then-Harvard Professor Sen. Elizabeth Warren (D-Mass.) proposed legislation creating the CFPB led by a commission.

CUNA also called on the CFPB to execute its regulatory agenda in a way that ensures credit unions and other providers are able to provide safe and affordable products and services.

This includes:

  • Closely monitoring the impact its rules have had on credit unions and their members, and to appropriately tailor regulations to reduce burden or exempt credit unions entirely;
  • Using its statutory authority to grant appropriate exemptions from CFPB regulatory requirements;
  • Not extending the scope of its debt collection rulemaking to include first-party collectors;
  • Revising its short-term, small-dollar rule to ensure credit union participation in the market and to focus on abusers of consumers;
  • Adopting several revisions to its proposed remittances rule to balance consumer protections with consumer access;
  • Considering additional amendments to Home Mortgage Disclosure Act reporting requirements to provide meaningful exemptions to credit unions;
  • Considering potential revisions to the Ability-to-Repay/Qualified Mortgage rule, which would include a “meaningful and prolonged feedback process;”
  • Issuing a rulemaking that would clarify the CFPB’s Unfair, Deceptive or Abusive Acts or Practices approach, which CUNA believes is currently overly subjective;
  • Exempting credit unions from any potential rulemaking to require financial institutions to compile, maintain and submit certain data on small business credit applications.
  • Continuing its engagement with the credit union industry through the Credit Union Advisory Council, roundtable discussions, webinars and other open communications;
  • Basing its rulemakings on thorough data and research;
  • Providing compliance resources to the financial industry, including frequently asked questions with interpretations, webinars with opportunities for questions, annual outreach to stakeholders, among others; and
  • Working with CUNA, credit unions and the National Credit Union Foundation in its consumer education efforts and use those efforts to guide consumer choices and provide a foundation for solid consumer financial health.