April 05, 2017

House panel presses Cordray on regs

CFPB Director Richard Cordray was challenged during a House Financial Services Committee hearing Wednesday for stating that the bureau cannot exempt credit unions from all its rules.

In an exchange with Rep. Andy Barr, R-Ky., Cordray said the CFPB cannot exempt credit unions from all rules. Barr disputed that.

In particular, Barr noted the negative impact of the bureau's remittance rule on credit unions on military bases, and he noted that NAFCU member Fort Knox Federal Credit Union, of Kentucky, has had to stop offering remittance products because of the compliance burden. "Why won't you provide relief to servicemembers and their families?" Barr asked. Cordray contended that Congress required the rule and that the CFPB cannot exempt credit unions from it.

Barr disagreed and said, "The bureau has the discretion to provide the relief to these credit unions" from the current rule.

NAFCU President and CEO Dan Berger, in a statement, thanked Barr for his recognition of credit unions' concerns.

"We thank Rep. Barr for his leadership and his recognition of the problems faced by credit unions under the CFPB's onerous rules," said Berger. "NAFCU continues to urge the CFPB to use the authority it has under Section 1022 of the Dodd-Frank Act to exempt credit unions from rules aimed at reining in the bad actors who gave us the financial crisis. Lawmakers and regulators – including the CFPB – have agreed that credit unions did not cause the crisis. NAFCU looks forward to working with both to help bring credit unions regulatory relief so they have the flexibility they need to meet the needs of their member-owners."

Credit unions' concerns about rules on remittances were also echoed by Rep. Nydia Velázquez, D-N.Y., who said credit unions in her district are finding it "increasingly difficult" to provide the service. Cordray said, "There may be more we can do on that front and that's something we're going to look at."

The CFPB is reviewing the remittance rule, and NAFCU plans to comment on that process.

Earlier, in an exchange with Rep. David Scott, D-Ga., Cordray said "It's pretty much a daily concern at the bureau for how our rules apply to community banks and credit unions."

"I agree with them when they tell me they can't bear the same burden" as big banks, he continued. He argued that the majority of credit unions were exempted from most CFPB rules by asset thresholds.

Rep. Brad Sherman, D-Calif., also urged Cordray to use his authority "to have simpler version of many of your rules applying to smaller financial institutions."

During his opening remarks, committee Chairman Jeb Hensarling, R-Texas, called on President Donald Trump to dismiss Cordray and criticized the bureau for a lack of checks and balances and due process in its enforcement actions.

In related news, Hensarling on Tuesday issued a new subpoena to the CFPB to demand documents related to the Wells Fargo scandal, auto lending and payday lending. Some of his demands were previously issued in a December 2015 subpoena.