WASHINGTON—With the Senate and House in recess this week, NAFCU and CUNA are focused on the CFPB’s appearance next week in front of the Senate Banking Committee.
CFPB Director Richard Cordray on April 7 will deliver his semi-annual report to the Banking Committee—as he did earlier this month in front of the House Financial Services Committee.
“It will be an opportunity for Director Cordray to update the Committee on the activities of the Bureau and an opportunity for members of the Banking Committee to ask questions,” emphasized CUNA Chief Advocacy Officer Ryan Donovan. “CUNA hopes that members of the Committee will continue to pursue the line of questioning that members of the HFSC pursued earlier, dealing with the issue of whether the CFPB has the authority to exempt classes of entities, like credit unions and small banks, from its rulemaking.”
Both NAFCU and CUNA have shared concerns that Cordray does not fully understand the issues the trade associations and credit unions have brought to him about regulatory burdens stemming from the Bureau’s rulemakings. During CUNA’s Governmental Affairs Conference in February, Cordray first thanked CUs for not being responsible for contributing to the banking practices that led to the Great Recession, but then added that he felt credit unions should fall under the Bureau’s rulemaking.
Noting the letter CUNA sent to Cordray last week in response to comments he made at the HFSC hearing, Donovan said CUNA was “taken aback” by Cordray’s perspective on the impact of the CFPB regulations on credit unions. “We encouraged him in that letter to dig deeper into the numbers and see that the impact CFPB rules are having on credit unions is quite significant.”
NAFCU also sent a very detailed response to Cordray, in which the trade association touched on concerns it held at the time the CFPB was created.
"When Dodd-Frank and the CFPB were proposed, NAFCU was the only trade association that opposed credit unions being under the Bureau, and said the CFPB was going to increase the regulatory burden on credit unions, despite proponents at the time saying there would be ways for the Bureau to exempt credit unions," said Vice President of Legislative Affairs Brad Thaler. "We said, ‘no.’ That without specific credit union exemptions the Bureau is never going to go far enough. Unfortunately, our concerns have proven true. The Bureau has not gone far enough in its exemptions for credit unions, and you can see that in the fact credit unions are declining at a faster pace since the start of the CFPB—many of the CUs disappearing being under $100 million in assets."
CUNA said it will also be watching an April 5 hearing in the Senate Banking Committee, titled “Assessing The Effects Of Consumer Finance Regulations.” That hearing will see testimony from Leonard Chanin of Morrison & Foerster, the author of CUNA’s legal opinion on the CFPB’s statutory exemption authority; Todd Zywicki, professor of law at George Mason University School of Law; and David Hirschmann, president and CEO of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness.
Donovan said CUNA is looking forward to that hearing as it could likely advance Congressional concerns over the impact of regulations on credit unions, as well as provide CUNA with another opportunity to share with Congress its recent report on the costs CUs are bearing as the result of regulations. Commissioned by CUNA, a recent study from Cornerstone Advisors found that collectively, credit unions each year face a $7.2-billion price tag to address regulation.
NAFCU said it will also monitor a one-day public meeting on the Federal Financial Institutions Examination Council's cybersecurity assessment tool April 7. The meeting, at the National Institute of Standards and Technology, will be webcast.
The meeting, aimed at generating feedback on the assessment tool, is part of a larger working session being held April 6-7 on NIST's critical infrastructure cybersecurity framework, NAFCU explained. Anyone registered for the NIST workshop can attend the one-day session on site. Registration by March 31 is required.
NAFCU is encouraging regulators to keep credit unions’ use of the FFIEC tool and NIST framework voluntary. It has urged that the framework remain scalable and flexible in its application to financial institutions of all sizes and structures.
The FFIEC tool, NAFCU has urged NCUA, should be voluntary for credit unions of all asset sizes so individual institutions can measure and assess their cybersecurity maturity for themselves.