In his speech, which took place at the Consumer Federation of America's Financial Service Conference, Cordray said the agency routinely hears that the cost of protecting consumers constricts the availability of credit and even drives some financial services providers out of business altogether.
He stated he had heard similar arguments when the bureau issued its regulations on international money transfers and the Ability-to-Pay mortgage rule.
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"We need to be wary of prophets of doom whose real agenda is to hamstring effective regulation in order to preserve predatory practices," Cordray said as part of the speech.
Cordray also cited previous commentary from naysayers on the agency's actions, including the Know Before You Owe mortgage disclosure rule. He said some asserted its implementation would paralyze the market, adding that applications rose year-over-year in October by 22%.
The totality of Cordray's remarks prompted a quick response from CUNA Chief Advocacy Officer Ryan Donovan.
"Director Cordray told consumer advocates today that concerns raised by credit unions and others regarding the impact the bureau's regulations have had on the availability of financial products and services have proven false," Donovan said in a prepared statement. "We firmly dispute this conclusion."
Donovan added, "When a regulation makes it more difficult or more expensive for a credit union to serve its member-owner, the regulation has failed credit union members. When credit unions stop offering products because of regulation, leaving consumers' only option large banks and less regulated non-bank providers, the regulation has failed consumers."
As an example, Donovan said the remittance regulation was well intended but offers limited consumer choice and availability of safe, cost-effective service. He added almost half of credit unions that offered the remittance services have either dropped or limited them because of the rule. As a result, consumers are forced to go to providers that they need the most protection from, he said.
"The bureau has very wide latitude to exempt any class of covered entity from its regulation," Donovan added. "There is no doubt it is well within their authority to exempt not-for-profit, member-owned credit unions from their regulations. But, the director and his staff have been very reluctant to use this authority, and their reluctance is costing consumers fuller access to safe and affordable financial services provided by financial institutions they own."
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