WASHINGTON — America’s Credit Unions is urging federal policymakers to overhaul the Consumer Financial Protection Bureau while also seeking greater clarity on proposed customer identification requirements for stablecoin issuers, laying out its positions in two separate letters to Congress and financial regulators.
Both letters, dated Aug. 21, address regulatory changes that could have significant implications for credit unions. One responds to a House Financial Services Committee discussion draft proposing broad changes to the CFPB, while the other addresses proposed rules implementing customer identification requirements under the GENIUS Act.
America’s Credit Unions, which represents institutions serving more than 146 million members, generally supported both proposals but recommended changes intended to reduce regulatory duplication and provide greater compliance certainty.
Letter to House FInancial Services Committee
In its letter to House Financial Services Committee Chairman French Hill (R-AR) and ranking member Maxine Waters (D-CA) the trade group supported provisions that would increase congressional oversight of the CFPB, change its leadership structure and limit duplicative supervision of credit unions already regulated by the National Credit Union Administration.
Among the changes supported or recommended by America’s Credit Unions:
- Put the CFPB under congressional appropriations. The group backed moving the bureau from its independent funding structure to the regular appropriations process, arguing that would increase accountability and transparency.
- Replace the CFPB director with a five-member bipartisan commission. America’s Credit Unions said a commission would bring different perspectives to policymaking and reduce regulatory swings when presidential administrations change.
- Require more rigorous cost-benefit analysis. The association said CFPB rulemaking should account for direct and indirect costs, including overlapping regulations and credit unions’ expenses for staffing, technology, vendor management, training and implementation.
- Establish clearer standards for UDAAP enforcement. The group supported defining what constitutes an “abusive act or practice” and providing financial institutions an opportunity to correct certain self-reported violations before enforcement when substantial consumer harm has not occurred.
- Expand CFPB innovation programs. America’s Credit Unions said the bureau’s no-action letter program should better accommodate long-term investments, including development and testing of artificial intelligence underwriting tools.
Support for Safe Harbor
The trade group also backed a proposed safe harbor for small-dollar loans but said changes are needed so federal credit unions can fully participate. Current NCUA Payday Alternative Loan II rules allow loans of up to $2,000, while the congressional proposal contemplates products of up to $3,500.
America’s Credit Unions recommended directing the NCUA to increase its PAL limit to $3,500 or establish another regulatory pathway. Without such a change, it said banks and nonbank lenders could benefit more from the proposed safe harbor than federal credit unions.
The association also strongly backed raising the CFPB’s asset threshold for direct supervision of credit unions from $10 billion to $21 billion and indexing it for future growth. It said large credit unions should be allowed to elect NCUA supervision instead of facing potentially duplicative CFPB oversight.
On the CFPB’s Consumer Complaint Database, America’s Credit Unions supported stronger identity verification and restrictions on publicly available complaint information. The group praised the bureau’s Aug. 14 decision to discontinue publication of unverified complaint narratives and visualizations but said all consumer complaints should remain confidential.
It argued that publicly displaying complaints can create misleading impressions about financial institutions and noted that federal law does not require the CFPB to publicly display the complaint database.
The association did not support every element of the CFPB reform proposal. It objected to eliminating references to using the Consumer Financial Civil Penalty Fund for consumer financial education, arguing financial literacy remains part of the bureau’s statutory mission.
Letter on FinCEN Proposal
Separately, America’s Credit Unions wrote to the Financial Crimes Enforcement Network regarding proposed customer identification program requirements for permitted payment stablecoin issuers under the GENIUS Act.
The proposal was issued jointly by FinCEN, the Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corp. and NCUA.
America’s Credit Unions supports a principles- and risk-based approach that gives stablecoin issuers flexibility in verifying customers rather than prescribing specific technologies or operational processes.
The association also supports allowing a stablecoin subsidiary of a credit union to rely on its parent credit union’s existing customer identification program as long as it addresses risks specific to stablecoin activities. Such an arrangement, it said, could prevent duplicative compliance costs, particularly for smaller institutions.
The group asked regulators to clarify whether institutions can rely on previously verified customer information instead of conducting a new identification process each time an existing member establishes another stablecoin-related relationship. It also sought clarification about reliance on programs operated through vendors or credit union service organizations and which institution would be liable for violations when one entity relies on another’s identification program.
Opposition to Extending ID Requirements
America’s Credit Unions opposed extending identification requirements to secondary-market stablecoin activity where the issuer does not have a direct relationship with the customer, saying issuers often would have little or no access to the information necessary to comply.
The group also urged regulators to consider streamlined, risk-based identification requirements for people whose only interaction with an issuer is a one-time or infrequent stablecoin redemption. Regulators should further clarify how requirements apply to wallet-to-wallet transfers, custodial and noncustodial wallets, exchange-mediated transactions, third-party technology providers and smart contracts, it said.
America’s Credit Unions also encouraged regulators to permit emerging digital identity tools and verifiable credentials while keeping requirements technologically neutral. It said newer identity-verification technologies could potentially reduce fraud and compliance costs while improving the customer experience.
Clarification Sought
Finally, the association asked regulators to clarify how FinCEN and prudential regulators will divide examination responsibilities. It recommended avoiding overlapping examinations when a stablecoin issuer’s parent credit union is already supervised by the NCUA, while supporting joint examinations for the largest stablecoin issuers.
In both letters, America’s Credit Unions said its goal is to preserve consumer protections while reducing unnecessary or duplicative compliance burdens and giving credit unions clearer rules as financial regulation and payment technologies evolve.
