By Robert McGarvey
The headline in a recent issue of Credit Union Times made my heart smile: “Credit Union Comes to the Aid of CFPB.”
The fact that this is news is disturbing but it also is fact that it is news because – generally – what I hear from credit union leaders is a deep seated hostility towards the Consumer Financial Protection Bureau and I just don’t get it.
The puzzlement is that the only credit union that has been slapped hard by CFPB is Navy Federal, the nation’s largest, which in late 2016 signed a consent decree admitting some unsavory debt collection practices. Navy was ordered to pay $23 million to affected members as well as a $5.5 million penalty.
Navy, earlier, had had figured in CFPB reporting over complaints filed against it. The only other credit unions that rated a mention were PenFed, State Employees’ and BECU and, well, when only four credit unions warrant notice by a regulator this hardly seems a crisis to me.
Besides, CFPB mainly spends its time pursuing very big banks and also sleazy law firms, mortgage lenders and such like. Here’s the list of recent enforcement actions. What’s not to like in it?
Why were credit unions formed in the first instance? Because banks largely ignored the financial needs of working Americans and often, too, they ripped them off as opportunity arose. So the bold and noble idea took hold that the cooperative framework could be harnessed to enable workers to lend to workers and to offer kindness wherever possible.
In the height of the mortgage crisis I recall conversations with numerous credit union CEOs who told me they were working hard to never foreclose on a mortgage, to find smart ways to restructure members’ loan agreements, to do what could be done – legally -to help people stay in their homes.
And they meant what they said.
Bankers, meantime,issued statements assuring shareholders that their interests were protected.
It’s a wholly different world, credit unions versus banks.
CFPB of course has a $10 billion size threshold before it exercises direct supervision – and that is about five credit unions. Out of roughly 5900. That means about 5900 have no direct relationship with CFPB.
Credit union operations experts tell me that – as Marvin Umholtz elaborated – “nearly all of CFPB’s rulemakings affect CUs of all sizes.”
I’m sure that’s true and I am also sure many credit union executives – most – resent yet more layers of federal supervision and mandatory compliance steps.
I don’t blame them.
But here’s the deal: CFPB is in the business of doing what credit unions also are supposed to do. Watch out for and help protect Americans who need help in navigating the financial services universe.
The other day the New York Times ran an editorial, “Hands Off the Consumer Finance Bureau.”
The Times, in the piece, said that Republicans in Congress want to fire Cordray, the CFPB chief, and weaken the agency. That would be a mistake, said the Times: “The consumer bureau is the only federal agency with the sole mission of looking out for the interests of ordinary Americans in their dealings with banks and other lenders.”
The Times added; “Mr. Trump would do well to let Mr. Cordray finish his term. After all, he has done a very good job protecting ordinary people from the powerful elites Mr. Trump spent much of his campaign raging against.”
These are thoughts credit union leaders need to mull. It is easy to rail against CFPB and regulation. But what if CFPB’s chief enemies are also the enemies of credit unions and many of their members?