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NAFCU President and CEO Dan Berger pushed back against CFPB Director Richard Cordray's testimony that CFPB does not need to do more to exempt credit unions from its regulation.

Cordray made these statements during his testimony today before the House Financial Services Committee.

"NAFCU and our members must challenge CFPB Director Cordray's assertion that Congress did not intend to grant credit unions a blanket exemption and that is why the Bureau is not doing more to provide relief. Congress gave CFPB authority in Section 1022 to grant exemptions on a rule by rule basis," said Berger. "Unfortunately, the CFPB has failed to exercise this broad legal authority as we believe Congress intended to allow credit unions to be exempted from certain rules."

"Moreover, the assertion that credit unions are not being negatively affected by the tidal wave of overregulation arising from CFPB and Dodd-Frank could not be more wrong," Berger said. "Director Cordray's denial that the tide of regulation is not contributing to the continued trend of credit unions being forced to cut back on member services, merge or go out of business flies in the face of facts."

Rep. Steve Stivers, R-Ohio, reiterated his argument that the bureau must use its Dodd-Frank Act authority to exempt credit unions from certain rulemakings. His and Rep. Adam Schiff's, D-Calif., letter to CFPB earlier this week was signed by a bipartisan group of 329 House members.

Cordray responded that credit union membership and lending has reached all-time highs: "That's good news I think, but it's not consistent with this notion that we're killing credit unions," he said. Cordray also said that credit unions are overall doing better in "a marketplace that rewards responsible lenders."

When Stivers noted the trend of small credit union consolidation, Cordray maintained that mergers are a trend that began in the 1920s. Stivers argued that overregulation has sped up the trend.

In an earlier exchange with Rep. Ed Royce, R-Calif., Cordray alleged that Congress had already spoken on credit union exemption by not explicitly exempting credit unions from the bureau's jurisdiction through the Dodd-Frank Act.

NAFCU, which was the only credit union trade association to demand that credit unions be exempt from Dodd-Frank, maintains that CFPB still has the authority to do more through Section 1022(b)(3)(a). NAFCU believes that Congress did not grant the larger exemption because Section 1022 allowed the bureau to exempt credit unions from certain rules as needed; however, CFPB has not used that authority as intended.

Rep. Brad Sherman, D-Calif., also defended Stivers' argument and said it is important that CFPB not propagate "one-size-fits-all" regulation. Sherman and Royce were among the letter signers.

Also during the hearing, Cordray said the hold harmless period relating to the bureau's Truth in Lending Act/Real Estate Settlement Procedures Act integrated mortgage disclosure rule will remain open-ended due to unforeseen information technology problems. He said CFPB will try to provide more guidance on the rule and does not expect the bureau to take enforcement actions against noncompliance unless there are blatant violations.

When discussing CFPB's pending rulemaking on payday lenders, Cordray said that the bureau want to make sure they are protecting and accounting for payday alternative loans (PALs) in the new rules.

Cordray also said he expects the following rules to be finalized this year: prepaid products and mortgage servicing.