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CFPB Director Richard Cordray, testifying yesterday before the Senate Banking Committee, called credit unions and community banks "the most responsible lenders we have" and said their record of low default rates in particular was exemplary.

Cordray was answering a question from Sen. Bob Corker, R-Tenn., about the bureau's mortgage rules portfolio lending exemption being limited to small institutions. Cordray added the bureau is trying to encourage mortgage lending at smaller institutions because of the high quality underwriting done at credit unions and community banks. Corker later pushed Cordray on manufactured housing, and Cordray conceded that fixed costs can be a problem for smaller loans and suggested the points-and-fees cap for loans under $100,000 could be increased.

During his testimony, Cordray also noted CFPB's proposed qualified mortgage rule changes from January to "facilitate mortgage lending by small creditors, particularly in rural or underserved areas." He said the changes are aimed at increasing "the number of financial institutions able to offer certain types of mortgages in rural or underserved areas, and help small creditors adjust their business practices to comply with the new rules.

Wednesday's hearing was held to examine CFPB's semiannual report to Congress. In advance of the hearing, NAFCU wrote lawmakers urging them to push for credit union regulatory relief. Noting the steady growth of regulatory burden since enactment of the Dodd-Frank Act, it urged an expansion of CFPB's exemption efforts so all credit unions may be exempt from various CFPB rulemakings. NAFCU also recommended changing the leadership structure of CFPB from a director to a five-member commission.

The need for a change from director leadership to a commission was echoed by several lawmakers in yesterday's hearing, including committee Chairman Richard Shelby, R-Tenn., and Sen. Tom Cotton, R-Ark. Shelby also entered NAFCU's letter into the hearing record.

Sen. Tim Scott, R-S.C., expressed concern about "one-size-fits-all, cookie-cutter regulation" affecting third-party auto lenders, and he urged Cordray to consider an enforcement "grace period" for the Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosures rule. Cordray responded that the agency is "not looking to be punitive" in the rule's early stages.

Several lawmakers also questioned Cordray on bureau spending, especially relating to its headquarters renovation, and on the bureau's data collection.