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	NAFCU witness Mark Sekula, of Randolph-Brooks FCU,told a House subcommittee thatthe Dodd-Frank Act adds toCUs' regulatory compliance burden. – NAFCU photo

June 17, 2011 – The Dodd-Frank Act includes several measures that will impede credit unions' ability to lend to small businesses, but there are a number of House bills that could help rectify the situation, a NAFCU witness told a House subcommittee Thursday.

Mark Sekula, executive vice president and chief lending officer at Randolph-Brooks FCU, a NAFCU member, discussed the law's impact during a hearing of the House Small Business Subcommittee on Economic Growth, Tax and Capital Access. In testimony submitted to the committee, Sekula cited key provisions that are of specific concern to credit unions, including:

• Section 1071: This requires creation of a data collection system, but Sekula said credit unions' field-of-membership restrictions could end up skewing the type of data collected.
• Section 1100 G: This requires the Consumer Financial Protection Bureau to evaluate actions that will impact "small entities" as part of its regulatory flexibility analysis. Sekula urged the panel to ensure the bureau adheres to the strict definition of small entity and considers the impact of Dodd-Frank regulations on credit unions.
• Price controls on debit interchange: These may, pending implementation of a final rule, require credit unions to revise or scale back their business lending due to re-allocation of resources to pay for debit card programs.
• Consumer Financial Protection Bureau oversight: Beginning July 21, the new agency is poised to receive rulemaking authority over credit unions of all sizes and examination and enforcement authority for those with more than $10 billion in assets.

These requirements are a few examples of what Sekula referred to as a "regulatory divide" among Congress, the administration and other policymakers that must be bridged if small business lending is to flourish. "Any congressional goal to promote lending will never be successful when the functional regulators are not on the same page," he testified.

To address this situation, Sekula urged the committee to support several key pieces of legislation. He hailed H.R. 1315, to modify the vote threshold required for the Financial Stability Oversight Council to veto a proposed CFPB rule; H.R. 1121, to create a five-person commission to govern the CFPB; and H.R. 1667, which would delay the transfer date for the CFPB's regulatory authorities until a director is confirmed.

Sekula also reiterated NAFCU's view that the CFPB needs to focus more attention on unregulated financial entities such as payday lenders. "Consumers do need protection from predatory lenders," he said. "We are hopeful that the CFPB will focus on these entities."