CFPB Improvements

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Updated August 2014

In June 2009, the Obama Administration released its plan for reforming the financial regulatory system. The hallmark of the administration's proposal was the creation of a new government agency aimed at consumer financial protection with rule making power over financial institutions, including credit unions.

While NAFCU supports bad actors on Wall Street being under a new regulatory regime, NAFCU was on the forefront opposing this new burden for credit unions, which by admission of members of Congress on both sides of the aisle, did not contribute to the financial crisis. Still, sweeping financial reform passed during the 111th Congress, establishing the Consumer Financial Protection Bureau that has rule making authority over all credit unions, and examination and enforcement authority over those exceeding $10 billion in assets.

In January 2012, President Obama, despite opposition from Senate Republicans, appointed former Ohio attorney-general Richard Cordray to be the first director of the Consumer Financial Protection Bureau (CFPB).

NAFCU backed several efforts in the 112th Congress to rein in the authority of the new Consumer Financial Protection Bureau (CFPB) including legislation that would change the leadership of the CFPB from a single director to a bipartisan five person commission, and legislation that would enhance the Financial Stability Oversight Council's ability to overrule CFPB regulation. While a bill reflecting these ideas passed the House, and similar bills were introduced in the Senate, neither became public law.  In April 2011, NAFCU testified before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit on, "Legislative Proposals to Improve the Structure of the CFPB."

These NAFCU backed legislative proposals have been reintroduced to this Congress along with some additional proposals including legislation that would place CFPB employees under the General Services pay schedule (typical government employee pay scale), and legislation that would require the CFPB to disclose annually to consumers information which the agency maintains on them. In October 2013, NAFCU again testified on these issues at a similar hearing.

In February 2014 the House passed the Consumer Financial Freedom and Washington Accountability Act (H.R. 3193), a package of several smaller bills that would bring greater accountability and transparency to the agency. The bill would replace the single CFPB director with a five person commission; subject the CFPB to the regular Congressional appropriations process; prohibit the CFPB from using a consumer’s personal financial information without consumer consent; strengthen the ability of the Financial Stability Oversight Council to overrule CFPB regulations, and set pay rates of CFPB employees in accordance with the GS pay scale. The Senate is not expected to consider changes to the CFPB structure during this Congress.

Additionally, NAFCU has also endorsed a measure that was introduced in both chambers that would create an Office of the Ombudsman housed within the Federal Financial Institutions Examination Council to oversee the appeals process should a financial institution challenge a material supervisory determination. NAFCU believes this outside mechanism allowing credit unions to challenge exam findings from both the NCUA and/or the CFPB will promote consistency and eliminate the current conflict of interest inherent in the appeals process. This legislation has been introduced in the 113th Congress as the Financial Institutions Examination Fairness and Reform Act (H.R. 1553 / S. 727).  

 While making fundamental changes to structure of the CFPB remains an uphill climb, it is worth noting that the president has signed into law NAFCU-backed legislation which would require the CFPB to keep confidential the privileged information it receives from financial institutions. This is consistent with provisions already in place for other financial regulators. 

Policy Letters

6-12-2014 NAFCU Letter to the Senate in Support of the Mortgage Choice Act of 2013 (S. 1577)

6-9-2014 NAFCU Letter to the House in Support of the Mortgage Choice Act of 2013 (H.R. 3211)

6-9-2014 NAFCU Letter to the House Financial Services Committee to Promote Transparency and Accountability at the CFPB