The National Association of Federal Credit Unions has submitted a letter to Congressional leaders outlining its top priorities for 2015. Among other things, the letter calls for relief from over-regulation by the Consumer Financial Protection Bureau. The NAFCU hopes that the new Republican-led Senate and House will be more amenable to altering or abolishing various requirements that currently govern the operation of credit unions. The NAFCU letter can be found here.
According to the NAFCU, the total number of credit unions across the country has dropped by 21 percent since 2007, a loss of more than 1,600 individual credit unions. Many of those closures occurred after the Dodd-Frank financial reform law was passed. “A main reason for the decline is the increasing cost and complexity of complying with the ever-increasing onslaught of regulations,” the letter stated. The letter notes that the NAFCU opposed including credit unions among the institutions subject to CFPB regulation. “Unfortunately,” says the NAFCU, “many of our concerns about the increased regulatory burdens that credit unions would face under the CFPB have proven true.”
The NAFCU claims that credit unions were not contributors to the financial crisis yet are still subject to increasing regulatory requirements mandated under the Dodd-Frank Act. To remedy the situation, the NAFCU is recommending a five-point plan. The plan is the same one incorporated in a House bill in 2013 that subsequently died in committee. The NAFCU hopes that the legislation finds new life in the new House.
Among the NAFCU recommendations are several items that pertain directly to CFPB rules. The NAFCU proposes providing credit unions with the ability to delay implementation of CFPB rules that directly affect them, and to tailor those rules for their unique structure. In addition, the NAFCU would require the CFPB to embark upon a thorough cost-benefit analysis of proposed rules. The analysis would require a three-year review of enacted rules and an automatic reconsideration of rules that exceeded by 20 percent or more their original cost estimate.
Another area of concern cited in the letter is data security, and area that the banking industry also has identified as problematic. According to the NAFCU, credit unions are often left on the hook when negligent retailers allow consumers’ financial data to be stolen. Credit unions would like to see national standards established for merchants in their handling of financial data. This would include requiring merchants to disclose their data security procedures to consumers and holding those merchants accountable for data breaches by mandating timely disclosures of breaches and shifting the administrative burden of breaches to the merchant rather than the credit union.