Exempt Credit Unions From Credit Application Data: CU Trades
“Treating all financial services entities as the same often results in outsized compliance burden for community-based financial institutions.”
The CFPB should exempt credit unions from requirements that financial institutions report information about applications for credit made by women-owned, minority-owned and small businesses, national credit union trade groups said this week.
Such data for credit union lending would be misleading, Andrew Morris, NAFCU’s senior counsel for research and policy said in a letter to the agency.
For instance, he said, credit unions serve distinct fields of membership and are subject to limits in their ability to make business loans.
“Given the unique characteristics of credit unions and their limited capacity to absorb additional regulatory costs, the CFPB should seek to exempt credit unions from any future rulemaking that compels disclosure of small business lending information,” Morris said.
He added that information about lending to small businesses, minority-owned companies and women-owned firms would look different for credit unions because of regional concentrations of business.
He said that because of field of membership and business lending restrictions, lending by credit unions cannot be easily compared with such business at other types of lenders.
CUNA also asked that credit unions be exempt and that the CFPB should conduct cost-benefit analyses before issuing any rules or guidance affecting credit unions.
“Despite this unique structure and mission, the Bureau has at times unjustifiably applied the data, feedback and trends of bank entities to credit unions,” Alexander Monterrubio, CUNA’s senior director of advocacy and counsel said in a letter to the agency. “Treating all financial services entities as the same often results in outsized compliance burden for community-based financial institutions.”