Robbie Thompson: CFPB Hears Credit Unions Loud and Clear
Date Posted: January 11, 2013
by Robbie Thompson, CUAD President/CEO
I often hear people say that no matter what we do, Washington or regulators won’t listen. And, often I hear people’s remarks that there is no point in going to Washington to meet with their elected officials, or that writing comment letters to regulators doesn’t matter. And I get it. It is frustrating when it seems like it doesn’t work and you don’t see immediate results. At times the lack of response is discouraging, but I know that if we don’t show up, if we don’t comment, if we don’t continue to speak out, if we don’t keep fighting for a seat at the table, that seat will be no longer remain and our voice will not be heard at all.
In the last Congress, we have seen our efforts pay off as CUNA, the Leagues, and credit unions were able to secure regulatory relief to eliminate the duplicative ATM disclosure requirements and to reduce the number of privacy notices sent out. And, just yesterday we received some confirmation that our advocacy efforts are being heard by the Consumer Financial Protection Bureau.
Back in December of last year, a group of about 12 credit union professionals from the Dakotas descended on Washington D.C., in part to meet with officials at the CFPB. During that meeting, and in multiple previous meeting we have had with CFPB, we - like CUNA and many other Leagues and credit unions around the country - have expressed the positive virtues of the credit union model and continued to stress that we did not cause the crisis that prompted all the new laws.
We told them that we are the model that needs to be protected. We treat our members right and fair. And since the inception of the CFPB they have said they agree, and that they want to help credit unions and community banks. They have said that credit unions are a solution, not the problem. And that they want to level the playing field to strengthen and encourage our model not hurt it. However, with so many new regulations issued by the CFPB under the Dodd-Frank Act that impact credit unions, it just hasn’t felt as if their words and actions matched. That is, until yesterday.
Yesterday the CFPB issued the long-awaited ability to pay rule required under the Dodd-Frank Act. While this rule seems in part to simply capture many of the safe and sound practices credit unions already use in underwriting loans, and although it will increase regulations for credit unions, the CFPB’s action (at last) did seem to live up to their words.
In this rule, the CFPB is taking action to treat credit unions differently. To treat them like they are the model they want to protect. Below are comments issued by CFPB Director Richard Cordray, regarding the ability to pay rule, and a proposal issued to treat credit unions differently because of our consumer centric model.
“While working on the Ability-to-Repay rule, we came to another important recognition. Many have said, including myself, that community banks and credit unions did not cause the financial crisis. Their traditional model of relationship lending has been beneficial for many people in rural areas and small towns across this country, including the small town in Ohio where I was born and raised. They find ways to make loans that respond to personal situations and cannot be captured by any generic metrics. They depend on keeping a good reputation in the community, and they often hold those loans in their own portfolio. Accordingly, they have strong incentives to pay close attention to the borrower’s ability to repay.
So today we will also be proposing a further adjustment to the Ability-to-Repay rule to create a special category of Qualified Mortgage loans made by smaller lenders such as community banks and credit unions. This proposal also contains measures to ensure that nonprofit groups and state housing agencies that lend to low- and moderate-income families can continue to play a vital role in the housing market. These groups offer a valuable range of financing and support, from down-payment assistance to first-time homebuyer programs to construction programs that build up communities one beam at a time. We look forward to considering your feedback, which has been so helpful to us in resolving the many difficult challenges posed by the Ability-to-Repay rule.”
This statement, like the ATM disclosure and Privacy* law changes obtained from Congress in the last session, while not glamorous or frequently talked about, shows that our advocacy efforts matter and can work," *H.R. 4014, which will ensure that groups or individuals that supply information to the Consumer Financial Protection Bureau (CFPB) would not waive their right to privacy protections.
So while we are never going to get everything we want all the time from Washington or from regulators, I can say with certainty that if we do not let our voices be heard and our faces seen, we will be sure to receive even more of what we don’t want.
Our efforts are sometimes thankless, often frustrating, and always challenging - but it’s worth it. To the advocates that make the calls, write letters, issue comments, and make visits: Thank you!