Oct. 30, 2013 – NAFCU witness Lynette Smith, testifying before Congress on the burdensome, costly rules imposed by CFPB, told lawmakers Tuesday that credit unions support consumer protection, but should not be under CFPB oversight.
Smith, president of Washington Gas Light FCU, testified on behalf of NAFCU before the House Financial Institutions and Consumer Credit Subcommittee Tuesday during the hearing titled “Examining Legislative Proposals to Reform the Consumer Financial Protection Bureau.”
“NAFCU was the only financial services trade association to oppose credit unions of any size being placed under the CFPB’s direct regulatory authority,” Smith said. “Despite the fact that credit unions are already heavily regulated and did not contribute to the financial crisis, credit unions of all sizes are still subject to the rulemaking authority of the CFPB.”
During the hearing, subcommittee Chairman Shelley Moore Capito, R-W.Va., questioned the CFPB’s one-director leadership model and whether its rules and regulation would be more effective if the bureau were led by a five-person commission. Smith responded that a board would offer more diversity of opinion and continuity over time.
Smith also backed making it easier for the Financial Stability Oversight Council to veto CFPB rules for safety-and-soundness reasons. She also spoke in favor of House Financial Services Committee Vice Chairman Gary Miller’s bill, H.R. 2572, the “Regulatory Relief for Credit Unions Act of 2013.” The bill, which includes several elements from NAFCU’s five-point plan for credit union regulatory relief, is “aimed at enhancing the ability of the CFPB to work with credit unions in a mutually conducive and productive way,” Smith said.
Smith thanks subcommittee Chairman Shelley Moore Capito, R-W.Va., for holding Tuesday's hearing.
Also during Tuesday’s hearing:
- Rep. Spencer Bachus, R-Ala., asked if it would help to raise from $10 billion to $25 billion the asset size threshold exempting credit unions from direct CFPB examination authority. Smith said all credit unions should be exempted from CFPB oversight.
- Rep. Keith Rothfus, R-Penn., asked witnesses their thoughts on the CFPB’s data collection and how breaches of that information would affect their members. Smith said her credit union’s reputation would be at risk if there was a breach of her members’ data.
- Rep. Marlin Stutzman, R-Ind., asked Smith how an average-sized credit union handles the increased compliance burden from the CFPB. Smith said many credit unions hire firms to assist with underwriting, but the cost to hire help is often passed to the members.
Along with Smith, the subcommittee also heard from: U.S. Chamber Center for Capital Markets Competitiveness Executive Director Jess Sharp; Summit Financial Group Senior Vice President and Chief Financial Officer Robert S. Tissue, on behalf of the West Virginia Bankers Association; and American Federation of Labor and Congress of Industrial Organizations Policy Director and Special Counsel Damon A. Silvers.