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NAFCU details CFPB’s egregious regulatory overreach ahead of hearing
NAFCU Senior Vice President of Government Affairs Greg Mesack wrote to the House Financial Services Subcommittee on Financial Institutions and Monetary Policy ahead of its hearing examining regulatory overreach to detail how overregulation has harmed the credit union industry.
Mesack highlighted that the number of credit unions has declined by more than half since the passage of the Dodd-Frank Act. He also noted that credit unions being made subject to the rules and regulations of the CFPB despite being not-for-profit cooperatives and already being subject to strict field of membership and capital restrictions, as well as numerous consumer protection provisions in the Federal Credit Union Act, is another “major reason for the decline in credit unions.”
“As such, the CFPB should be more cognizant of the unique characteristics of the credit union industry and the benefits they provide to consumers and use its exemption authority to help limit burdens on credit unions,” wrote Mesack. “Unfortunately, this has not been the case.”
Mesack outlined the CFPB’s mischaracterization and attack on certain financial services fees as “junk fees,” noting it is the most recent example of regulatory overreach by the bureau. He explained that the required disclosures of financial fees have made significant positive impacts on consumers’ understanding of financial product pricing, provided for better comparison shopping, and improved consumer repayment behavior.
“Ironically, this example of regulatory overreach is also one that undercuts the CFPB’s own efforts to help consumers by developing effective disclosures about financial products,” added Mesack. “Ultimately, the CFPB’s regulatory overreach as part of its war on fees could lead to serious negative economic consequences for consumers and community institutions.”
Relatedly, NAFCU recently conducted a survey of its members, finding an overwhelming majority support CFPB reforms and do not believe the bureau’s efforts are effective.
NAFCU will monitor the hearing – slated for 2 p.m. Eastern today – and will report any relevant updates via NAFCU Today. The association will continue to remain engaged with the lawmakers to ensure regulators are held accountable and credit unions are not faced with overly burdensome regulatory compliance requirements.