Federal GAC: CUNA Warns Reg Burden is Growing ‘Crisis’
February 1, 2011
March 3, 2011
Credit unions, owned by their members, already have strong incentives to treat consumers well, but they face a crushing “crisis of creeping complexity” under a steady accumulation of regulatory requirements, Credit Union National Association (CUNA) President/CEO Bill Cheney testified before a House subcommittee Wednesday. In opening statements to the hearing, subcommittee member after member voiced concerns about one of those burdens–the interchange fee regulations contained in the Dodd-Frank Act.
The afternoon hearing conducted by the House subcommittee on financial institutions and consumer credit was titled, “The Effect of Dodd-Frank on Small Financial Institutions and Small Businesses.”
Cheney noted for the panel of federal lawmakers that as credit unions are not-for-profit financial cooperatives, members are the ones who receive the benefit of ownership, through reduced fees, lower interest costs, and higher rates on savings.
“Every dollar that a credit union spends complying with an unnecessary or overly burdensome regulation is a dollar that is not used to benefit the credit union’s membership,” Cheney stated.
He warned that the increasing regulatory requirements pursuant to Dodd-Frank and other government initiatives–called by some the “creeping crisis of complexity”–is a major driver behind current credit union consolidations, making it impossible for smaller credit unions to exist.
He added that credit unions are concerned that the increasing regulatory burdens also stifle innovation.
The CUNA leader also highlighted two key areas of the Dodd-Frank law, which he termed “very significant” to credit unions First, he exhorted Congress to strike a legislative remedy that will ensure a meaningful carve-out from interchange fee restrictions for small debit card issuers, such as all but three credit unions, as intended in the original bill.
There has been a growing cry from regulators and legislators alike that the Federal Reserve Board’s proposed implementation of the statutory exemption is likely to be impotent to protect small issuers.
The second area of credit union concern addressed by Cheney: provisons of Dodd-Frank intended to reduce regulatory burden by requiring the Consumer Financial Protection Bureau (CFPB) reduce “unwarranted” burdend and assess the impact of proposed rules on credit unions and community banks with less than $10 billion in assets.
Cheney said that it is feared that the result of the CFPB’s comprehensive review process will be an increased, not decreased, regulatory burden.
On another key credit union topic, Cheney urged lawmakers to increase the statutory credit union member business lending cap to create an influx of $10 billion in new credit for small business in the first year, more than 100,000 new jobs–all at no cost to taxpayers.
This story was reprinted with permission from CUNA NewsNow.