Trades Ask to Exempt Credit Unions From CFPB Small Business Reporting Rule
Also, NAFCU and CUNA believe credit unions should be exempt from the data collection required under Dodd-Frank.
Credit unions are unique financial institutions and should be exempt from forthcoming CFPB rules requiring the collection of data regarding applications for credit from women-owned and minority-owned small businesses, CUNA and NAFCU told the agency Monday.
“As entities bound to serve a specific field of membership, the data collected from credit unions would likely be incomparable to other lenders that are legally permitted serve anyone walking through its doors or accessing its websites,” Alexander Monterrubio, CUNA’s senior director of advocacy and counsel, said in a letter to the CFPB.
And credit unions cannot make an unlimited number of business loans since they are subject to the Member Business Loan cap, Andrew Morris, NAFCU’s senior counsel for research and policy, said in a separate letter.
“Credit unions also face limits on the aggregate number of member business loans they can originate,” he said.
As a result, the two credit union trade groups contended that the institutions they represent should be exempt from the data collection, which is required under the Dodd-Frank Act. Community development groups have accused CFPB officials of dragging their feet on issuing regulations requiring the collection of the data. The California Reinvestment Coalition sued the agency and the bureau agreed to move forward on the rule as part of a settlement of that suit.
The two credit union groups said they support the intent of the data submission requirement in Section 1071 of Dodd-Frank.
“Credit unions support the goals of section 1071 and seek to provide all members with fair and equitable financial opportunities,” Monterrubio wrote. However, he added that applying the rule to credit unions would “likely add substantial strain on credit unions’ finite compliance resources but provide an unknown tangible benefit.”
He continued, “Credit unions have no pattern of unfair lending and alternatively, are seeking ways to provide more business loans to consumers, not fewer.”
Morris warned that the cost to some credit unions may be so high that they could stop making business loans. “Many smaller credit unions that engage in small business lending have only a few employees who handle business loan applications,” he said.