Mcwatters calls for CU carve-out
The NCUA chairman is again urging the CFPB to use its exemption authority.
IN ONE OF HIS FIRST OFFICIAL ACTS since being named permanent National Credit Union Administration chairman, Mark Mcwatters is calling for Consumer Financial Protection Bureau Director Richard Cordray to implement a conditional exemption from CFPB examination and enforcement authority for CUS with assets above $10 billion.
In a letter to Cordray, Mcwatters pointed to credit unions’ unique role within the financial servies marketplace, given that they are not-for-profit cooperatives answering to member-owners. Mcwatters said shifting examination and enforcement authority to NCUA would improve upon a system the currently places undue burden on credit unions.
“Subjecting federally insured credit unions and their consumer/ member owners to the dual-examination — and, in the case of federally insured, state-chartered credit unions, triple-examination — regime mandated under Section 1025 of the Consumer Financial Protection Act imposes unnecessarily burdensome costs, particularly given their positive, consumer-focused role,” wrote Mcwatters.
Only six credit unions currently have assets of $10 billion or more and are subject to direct CFPB examination: Navy FCU, State Employees’
FCU, Pentagon FCU, BECU, Schoolsfirst FCU and The Golden 1 CU.
The chairman’s letter marks his second high-profile call out to Cordray in just over a month, following a May letter in which he urged the director to exempt credit unions from the bureau’s oversight.
By providing a carve-out for CUS, wrote Mcwatters, the CFPB could free up resources to better focus on larger investor-owned, for-profit institutions while also providing consumer protections for credit union members.
Mcwatters pledged that the two organizations can work together to benefit consumers. “As the prudential regulator of federally insured credit unions, the NCUA possesses a broader arsenal of enforcement tools than is available to the CFPB, allowing the agency to take more targeted actions to protect consumers and address consumer financial protection law violations.”
Mcwatters’ letter echoes many of the sentiments CU trade groups have expressed for years, and the National Association of Federally-insured CUS was quick to praise the chairman.
“NAFCU — from the bureau’s inception — was against the CFPB having direct oversight over credit unions,” NAFCU President and CEO Dan Berger said in a statement. “NAFCU and its members thank chairman Mcwatters for making this request directly to Director Cordray.”
State credit union trade associations also praised the move.
“I applaud the Chairman’s ask of the CFPB. As the prudential regulator, NCUA has the expertise, access, and structure to efficiently and effectively regulate credit unions for rules promulgated from CFPB and any other regulators that have authority over credit unions,” said Cooperative Credit Union Association President Paul Gentile. “The shift would also put CFPB’S focus squarely on those that it was intended to regulate—the too big to fail institutions and the bad actors. Those two segments are expansive and are a better use of the CFPB’S resources.”
NCUA Chairman J. Mark Mcwatters is the third NCUA Chairman to hold CFPB Director Richard Cordray’s feet to the fire.
CFPB Director Richard Cordray has so far refused to adhere to NCUA’S request to drop the bureau’s oversight of CUS with assets of $10 billion or more.