CUNA Greets Kraninger With CFPB Wish List

CUNA welcomed new CFPB Director Kathy Kraninger with a wish list topped by a request to exempt credit unions from many of the agency’s rules.

Kraninger was narrowly confirmed by the Senate on Thursday. She replaces Acting Director Mick Mulvaney and is expected to continue Mulvaney’s pro-business policies at the agency.

Consumer groups have sharply criticized those policies as anti-consumer, while credit unions have supported many of them.

Kraninger’s tenure at the CFPB could be called into question if the U.S. Supreme Court decides to consider the constitutionality of the section of Dodd-Frank that created the agency. Several businesses have challenged the statute, contending that the section that only allows the president to fire the director for cause violates the constitution.

Credit union trade groups said they welcome Kraninger’s confirmation.

“We will continue to advocate for a tailoring of regulation at the bureau to reign in unscrupulous behavior by Wall Street banks and bad marketplace actors while exempting credit unions from burdensome regulations that will simultaneously raise costs on their members,” NAFCU President/CEO B. Dan Berger said.

“NASCUS shares many objectives with the Bureau, including gaining efficiencies, minimizing duplication of efforts, and alleviating credit unions from unnecessary burdens while protecting consumers’ financial interests,” said NASCUS President/CEO Lucy Ito. “Our shared objectives will serve as the basis for future cooperation to benefit the credit union industry.”

Still, CUNA President/CEO Jim Nussle said in a letter Thursday that he believes there is more work to be done.

“Unfortunately, the Bureau, in its first several years of existence, missed many opportunities to leverage credit unions’ mission and history to the benefit of consumers, and finalized regulations that ultimately harmed credit unions and their members,” Nussle wrote. “Consumers lose when one-size-fits-all rules force credit unions to pull back safe and affordable options from the market, pushing consumers into the arms of entities engaged in the very activity the rules were designed to curtail.”

Nussle and other credit union trade groups were highly critical during the CFPB tenure of Richard Cordray, an Obama Administration appointee.

During the last Congress, some 70 senators and 329 House members asked Cordray to take into account the regulatory burden that credit unions and community banks face—and possibly exempt them from some rules.

Now-NCUA Chairman J. Mark McWatters also asked Cordray to exempt credit unions from some rules—particularly mortgage regulations. And then-NCUA Chairman Rick Metsger asked Cordray to exempt credit unions from the bureau’s payday lending rules.

When Cordray issued the payday lending rules, they contained a carve-out for loans modeled after the NCUA’s Payday Alternative Loan program.

However, Nussle said the bureau generally has failed to consider the concerns of credit unions. Nussle told Kraninger that the agency should take into account credit unions and their model, in several other areas.

“If the Bureau spent fewer resources on regulating and supervising credit unions, then it could spend more time on entities actively engaged in predatory practices that exploit consumers,” he wrote.

Among other things, Nussle said the agency should:

• Better tailor its rules to target businesses that have a history of taking advantage of their customers.
• Target any rule issued concerning debt collection on third-party debt collectors.
• Craft revisions to the controversial payday lending rule to allow more credit unions to enter the short-term lending business.
• Revise its remittance rule to exempt more businesses. Specifically, CUNA is requested that the agency raise the safe harbor threshold from 100 remittances to 1,000 remittances in both the prior and current calendar year.
• Loosen credit union regulation under the Home Mortgage Disclosure Act.
• Allow reporting for Home Equity Lines of Credit to once again be voluntary.
• Continue Mulvaney’s efforts to eliminate what Nussle calls “regulation by enforcement.” Specifically, CUNA is asking the CFPB to clarify its broad authority to take action based on Unfair, Deceptive or Abusive Acts or Practices.
• Carefully examine its upcoming assessment report on the 2013 Ability-to-Repay and Qualified Mortgage Rule to determine if changes are warranted.
• Exempt credit unions from being required to compile data on credit applications by women-owned, minority-owned and small businesses.