WASHINGTON–CUNA said it is “very pleased” with the final rule the CFPB issued on small-dollar, short-term loans, otherwise known as payday loans or auto-title loans.
“This is an issue important to credit unions that want to be there to meet needs of members who need small dollar credit,” said CUNA’s chief advocacy officer, Ryan Donovan. “The proposal the CFPB put out last year would have significantly reduced the ability of credit unions to meet these borrowers’ needs.”
Donovan, who praised the CFPB’s intentions in fighting “debt traps,” credited advocacy by CUNA and the leagues for getting the CFPB to alter its proposal.
“This was a very aggressive advocacy effort. CUNA staff met with the Bureau dozens of times. State leagues met with the CFPB,” said Donovan. “We participated in workshops and with NCUA, filed a 60-page comment letter, and retained outside counsel for our legal letter, and what the final rule shows is that that effort paid off. We made the case to the CFPB that credit unions are different. And the CFPB’s final rule provides a full exemption for (NCUA’s Payday Assistance Loans). It provides exemptions for providers of fewer than 2,500 covered loans that represent no more than 10% of the revenue of the financial institution. Importantly, the CFPB changed their calculation of APR. Instead of an all-in APR, they are using the APR in Reg Z to divine the cost of credit. So, there is a lot to be pleased with in this rule. We appreciate that the Bureau took the time to listen to the concerns of credit unions and their members.”
Separately, credit union leagues from five states participated in Hike the Hill where they focused on protecting the credit union tax status, the need for regulatory relief and data security, CUNA said.
Credit unions from Connecticut, Iowa, Maine, Pennsylvania and Vermont met with members of Congress, as well as federal agencies, during their time in Washington.
“Our main message was about the credit union tax status and how it’s core to our business model,” said Justin Hupfer, CEO of PolicyWorks. “We wanted to make sure legislators are aware that the benefits of our tax treatment end up with our members, who save $110 million per year in Iowa.”
Credit unions asked for support of the tax status, support for the Residential Loan Parity Act, support for any proposals that would impose data security standards on merchants and discussed the effect on consumers of the Equifax breach with their congressional delegation. When meeting with the NCUA, credit union leaders discussed the long-term outlook on the Share Insurance Fund, CUNA reported.
These meetings included sharing personal stories on how regulatory burden impacts members, CUNA explained.
“Leadership from Connecticut’s Credit Unions had a very productive Hike the Hill event in Washington, D.C.,” said Credit Union League of Connecticut President/CEO Jill Nowacki. “Meeting with regulators and our members of Congress on a regular basis is critical to defining what credit unions are and how issues affect us.”
Nearly 25 credit union leaders from Maine visited Washington, D.C., also meeting with every member of the state’s Congressional delegation.
“This is the second-largest Hike we have ever had, which tells me that our credit unions understand how crucial it is to participate in these types of events and activities,” said Maine Credit Union League President Todd Mason. “It's really nice to see such a strong presence take the time to come to Washington, D.C."
In addition to meetings on Capitol Hill, leagues attended briefings with CUNA staff and met with NCUA and the Consumer Financial Protection Bureau.