Updated April 2013
In June 2009, the Obama Administration released its plan for reforming the financial regulatory system. The hallmark of the administration's proposal, known as the White Paper, 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 these ideas passed the House, and were introduced in the Senate, neither became public law.
NAFCU was invited to testify before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit on, "Legislative Proposals to Improve the Structure of the CFPB." This hearing included discussions about the ideas above and more. Read the full testimony here.
During the 112th Congress NAFCU 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.
While making fundamental changes to structure of the CFPB remain an uphill climb, it is worth noting that the president recently signed into law NAFCU-backed legislation (H.R. 4014) which would require the CFPB to keep confidential the privileged information it receives from financial institutions. This is consistent with provisions already in
In January 2013, at the beginning of the 113th Congress, President Obama nominated Richard Cordray to a full-term as head of the CFPB. That same month, the U.S. Court of Appeals for the D.C. Circuit ruled that the recess appointment of individuals to the National Labor Relations Board was unconstitutional. Although it wasn't directly addressed by the courts, Mr. Cordray's initial appointment was made via-recess at the same time. This has contributed to renewed efforts by Senate Republicans to block his nomination.
In a February 1 letter drafted by Senate Minority Leader Mitchell McConnell and top Banking Republican Mike Crapo of Idaho, over 40 Senators called for structural changes to ensure that the CFPB in operating in an open and transparent way. In related action, Senator Jerry Moran of Kansas re-introduced legislation (S. 205) outlining the changes Senate Republicans support including changing leadership of the bureau to a five-person commission and subjecting the bureau to the Congressional appropriations process.
On March 19, 2013 the Senate Banking Committee voted 12-10 along party lines to approve the president’s nomination of Richard Cordray to a full five-year term as CFPB director. His nomination will now move to the full U.S. Senate.