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Ahead of CFPB Director Kathy Kraninger's testimony before the Senate Banking Committee today, NAFCU Vice President of Legislative Affairs Brad Thaler wrote to the committee to voice credit unions' perspective on CFPB issues impacting the industry, including its qualified mortgage (QM) rule, leadership structure, and more.

Thaler reiterated NAFCU’s long held position that the CFPB's leadership structure should be reformed to a commission-based model to ensure transparency and accountability and the association’s continued support of legislative efforts to do so.

“The U.S. Supreme Court highlighted this fact when earlier this year it released a decision in Seila Law v. the Consumer Financial Protection Bureau that found the firing of the single director only for ‘just cause’ to be unconstitutional,” Thaler wrote.

In addition, on the CFPB’s ongoing rulemaking to revise the definition of a QM under the ability-to-repay/QM rule in light of the expiration of the government-sponsored enterprise (GSE) patch, Thaler reiterated the association’s call to discourage the CFPB from pursuing a QM definition that uses the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) as a proxy for underwriting requirements.

On the CFPB’s recently issued interim final rule making temporary changes to Regulation X, Thaler called on the CFPB to make an exception to unnecessary and burdensome regulations for disaster-related programs that move delinquent borrowers into current status. This exception, Thaler said, “will allow credit unions to work with their members quickly and without being encumbered by paperwork that the credit union and the GSEs do not require to offer these options.”

Thaler also voiced NAFCU’s call to modernize provisions in the Electronic Signatures in Global and National Commerce (E-SIGN) Act to help credit unions better meet the needs of members, while respecting social distancing requirements and voiced support for the E-SIGN Modernization Act, S. 4159, which aims to streamline how consumers consent to receiving electronic documents.

NAFCU joined with several other trade associations wrote to Senate leadership to highlight how financial services and business have drastically transformed since the outdated E-SIGN Act was enacted 20 years ago, including a significant increase in consumers' internet access and literacy. The group also voiced support for the inclusion of the E-SIGN Modernization Act in the Senate’s Phase 4 coronavirus relief package.

“We have also previously requested that the CFPB adopt a presumptive consent framework to facilitate electronic delivery of disclosures,” wrote Thaler. “We asked the CFPB to do this by amending all of its rules to allow financial institutions to deliver electronic disclosures without having to confirm the consumer’s ability to receive documents electronically when the consumer initiates the transaction using an online service.”

Thaler concluded by voicing support for the CFPB’s current exemptions based on an entity’s asset size, but also stated that the association “strongly believes that the CFPB can do more, such as increasing transaction-based thresholds, or considering exemptions based on an institution's characteristics and activities.”

The hearing will be available via livestream on the committee’s website and is set to begin at 10 a.m. Eastern.

NAFCU will monitor the hearing the hearing today, in addition to Kraninger’s testimony before the House Financial Services Committee tomorrow.