Mcwatters calls for CU carve-out

The NCUA chair­man is again urg­ing the CFPB to use its ex­emp­tion author­ity.

Credit Union Journal - - Opinion - BY AARON PASSMAN

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.

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