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Jan. 10, 2014 – CFPB Director Richard Cordray, appearing as a guest on “The Daily Show with Jon Stewart” Wednesday, praised credit unions for their common-sense approach to mortgage lending, saying the bureau’s new mortgage rules are aiming to return the financial industry to such thinking.
When asked about push-back to new regulations, Cordray responded, “Look, this is a big change in the status quo, and so there’s always resistance – but these are sensible changes. This is really taking mortgage lending back to what community banks and credit unions have done for decades – checking out the numbers to make sure people can actually succeed in the loan, not just giving it to them and not caring if they fail.”
Stewart later discussed how regulations can be onerous for small businesses, putting them at a disadvantage to large corporations that can spend millions of dollars on compliance departments. Stewart asked if “smart” or “lean” regulations could be created for smaller institutions in a tiered system to address what he called an “undo” burden.
Cordray responded by referencing previous discussions with Sen. Elizabeth Warren, D-Mass.: “I think that’s absolutely fair. In fact, Senator Warren and I talked about this many times when I worked with her in this bureau in the early days. We have been trying to tier our regulation to treat smaller community banks and credit unions differently because we don’t think they were responsible for the crisis. They don’t need to be subject to all the same burdens because they didn’t cause the same problems.
“But the bigger banks,” Cordray continued, “they caused tremendous problems, they blew up the economy, caused untold harm to millions of people who lost jobs, lost homes, many people lost wealth. That’s something that should not happen again, and our mortgage rules will help see that it doesn’t happen again.”
A new post on NAFCU’s Compliance Blog by Director of Regulatory Compliance JiJi Bahhur provides a number of resources to assist credit unions with implementation of the new mortgage rules. Bahhur also reassures credit unions, in the post, that the CFPB and NCUA, after requests from NAFCU, have said “good faith” efforts at compliance are their goal for the early months of the rules.