WASHINGTON–Why is America’s Credit Unions paying so much attention to a hearing this week in Congress for an agency that has, for all intents and purposes, been gutted by an executive order from President Trump? Because the CFPB’s offices may be all but vacant, but it’s rules all remain in place, according to one person.
On Wednesday, the House Financial Services Committee’s Subcommittee on Financial Institutions will hold a hearing on the CFPB at which Ana Fonseca, president and CEO of Logix FCU in California, will testify on behalf of America’s Credit Unions.
Fonseca’s testimony is expected to stress the trade group’s position that:
- Reforms are needed at the CFPB
- Credit unions don’t belong under the purview of the Bureau
- The CFPB should be led by a bipartisan board and not a single director
- Regulations need to be put around what constitutes unfair, abusive and deceptive practices
- There should be a cost/benefit analysis done before any new rules or regs are implemented, and more.
Other Points to be Raised
Carrie Hunt, chief advocacy officer with America’s Credit Unions, said other points Fonseca will hopefully be able to make during the hearing include that the CFPB tends to regulate by enforcement as opposed to using the rulemaking process.
“We think we need a return to regular order so that everyone again understands the rules of the road and that the public has appropriate opportunity to comment on what the CFPB is doing,” Hunt said.
Not the Same Old CFPB, But…
Asked by The Credit Union Daily why such a focus on an agency that the Trump Administration has all but shut down, having removed its name from its building and sending nearly all its employees home, Hunt answered by saying while the CFPB may be “frozen,” for the lack of another description, “very much all of the statutory and regulatory requirements that come out of the CFPB are still on the books.
“Even though the CFPB isn’t actively currently enforcing those doesn’t mean credit unions don’t have to comply with regulations,” continued Hunt. “It just means that there isn’t an agency that is actively working to enforce those. Credit unions certainly do not want to be caught in a situation where, if the agency were to be fully up and running again, even albeit in with a reduced footprint, (they are) caught flat-footed.”
Hunt said the trade group and its member credit unions strongly support consumer protections, but added there is already a strong consumer protection regime in statute and regulation in place.
“But how those laws get enforced and how those laws get interpreted has had a huge, huge impact on credit unions and it’s created dramatic regulatory burden,” Hunt said. “Since the inception of the CFPB we have lost over 3,000 credit unions and while that isn’t just due to regulatory burden, it is a huge, huge part of the increase in the cost of doing business.”
Looking Forward
Looking forward, Hunt said there will always be tension even when aligned philosophically on the need for consumer protections vs. executing on those same protections, and added, “Unless Congress chooses to formally eliminate the CFPB or chooses to change our consumer protection laws, those are in place irrespective of whether or not the CFPB has staff or irrespective of whether the CFPB has a budget.”
Hunt said she also believes the longer the CFPB stands stagnant, the more political pressure is going to grow to create some meaningful reforms that are more bipartisan in nature.
