While the credit union model is the most effective one for helping middle class citizens improve their financial health, government officials should enact policies to enable credit unions to do even more, Wright-Patt CU President/CEO Doug Fecher told a Senate panel on Tuesday.

While testifying before the Senate Banking Committee's Subcommittee on Financial Institutions and Consumer Protection he expressed hope that the new Consumer Financial Protection Bureau issues regulations that “empower consumers without adding to our regulatory costs.”

Fecher noted that his credit union's hometown of Dayton, Ohio, has lost 33,000 jobs during the recession and that “the need for our services has never been greater.''

He said that Wright-Patt CU helps its members by disclosing the cost of loans and other products up front. But he noted that while his credit union will change some terms of mortgages, he opposes reducing the principal because the costs will just be shifted to another part of the economy and that will be a net negative.

Wright-Patt CU is a $2.1 billion financial institution with about 210,000 members.

The credit union tries to teach members how to be good borrowers and savers and its goal is to “create an environment that helps people change their lives,'' Fecher said. In response to a question from Subcommittee Chairman Sherrod Brown (D-Ohio), Fecher agreed that consumers should have more precise information about mortgage costs so they know what they are getting into.

This could reduce the cost of housing and allow people to spend money building financial assets in other areas, Fecher added.

He also said that if the CFPB requires additional disclosure from all financial institutions, credit unions would look very attractive because their practices and products benefit consumers.

The full Senate Banking Committee is scheduled to vote Thursday on the confirmation of former Ohio Attorney General Richard Cordray to head the CFPB.

Fecher said that Cordray understands the unique mission of credit unions though he didn't take a position on whether Corday should be confirmed.

Senate Republicans have said they won't allow a CFPB director to be confirmed unless the Obama administration agrees to change the bureau's structure.

Fecher said his credit union was at a disadvantage because until the CFPB has a permanent director it is forbidden by law to regulate payday lenders and pawn shops. While credit unions are the most heavily regulated financial institution his competitors aren't and this creates an uneven playing field, he said.

But another witness, banking consultant G. Michael Flores, noted that many of those businesses are regulated by state governments so it is “a bit misleading to say they are unregulated.''