August 19, 2016

Cordray says CFPB already tailors regs to small FIs

CFPB Director Richard Cordray on Friday told a bipartisan group of 70 senators pushing for more regulatory exemptions for credit unions that the bureau already uses its Dodd-Frank Section 1022 authority to tailor regulation to smaller financial institutions.

In a NAFCU-sought effort, Sens. Joe Donnelly, D-Ind., and Ben Sasse, R-Neb., led a group of lawmakers in July to urge CFPB to grant credit unions relief through its authority to grant exemptions on a rule-by-rule basis to "any class" of entity from its regulatory requirements. The senators' letter was similar to one sent to Cordray in March by a bipartisan group of 329 House members.

NAFCU, the only credit union trade association that opposed any CFPB authority over credit unions from the bureau's inception, has repeatedly pressed the bureau to use its exemption authority more effectively.

"As I have expressed in the past, the Bureau recognizes that community banks and credit unions did not cause the financial crisis," Cordray wrote. "For that reason, the Bureau is committed to ensuring that the regulations that we promulgate are well-tailored and effective."

Cordray cited several examples of tailored regulations, including:

• the qualified mortgage (QM) rule's expanded safe harbor for small creditors;
• an interim final rule to exempt small creditors in rural and underserved areas for QMs and Home Ownership and Equity Protection Act (HOEPA) loans with balloon payment features;
• an exemption for small creditors from the Truth in Lending Act requirement to provide periodic statements; and
• an exemption for lower-volume depository institutions under Regulation C regarding data reporting requirements under the Home Mortgage Disclosure Act.

Cordray also highlighted the Small Business Regulatory Enforcement Fairness Act (SBREFA) panels that the bureau convenes during the rulemaking process.

NAFCU continues to maintain that more can be done to expand exemptions for credit unions and to better tailor regulations intended for larger financial institutions. The association has also noted that such regulatory relief would ensure CFPB resources are not wasted on implementing rules for institutions that were not the target of the rulemaking.