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CFPB Responds to 329 House Members on Exemption Authority
Tuesday, April 19, 2016 6:45 AM

Following the CUNA Governmental Affairs Conference, 329 members of the House of Representatives sent a letter organized by CUNA and the leagues to the CFPB encouraging the bureau to use its statutory exemption authority to better tailor its regulations to reduce impact on credit unions and small banks. This week, CFPB Director Cordray responded to the letter.

In his response Cordray outlines the Section 1022 requirement that the bureau consider the potential benefits and costs to consumers and covered persons, including the potential reduction of access to consumer financial products and services. He also cites the need to promote fair competition under Section 1021 of the Dodd-Frank Act. He once again recognized that credit unions did not cause the financial crisis, and outlined multiple ways in which the Bureau has provided relief for smaller financial institutions.   

He mentioned the recently issued interim final rule, which broadened the exemption for small creditors under the Truth in Lending Act's Regulation Z, which will allow more credit unions operating in rural or underserved areas to originate balloon mortgages and higher-priced mortgage loans. CUNA is pleased with this change, which was based on passage of the Helping Expand Lending Practices in Rural Communities Act at the end of 2015. 

While Cordray also cites the exemption of lower-volume depository institutions from HMDA reporting as an example of providing exemptions for certain creditors, CUNA has indicated on numerous occasions that this exemption does not go far enough to provide relief to credit unions. CUNA has suggested an exemption from reporting on HELOCs, which would provide meaningful relief to credit unions, since this reporting was previously voluntary.   

The CFPB also cites an amendment to the Electronic Fund Transfer Act, which states remittances requirements do not apply to transfers sent by entities that provide 100 or fewer remittances.

As CUNA has continually pointed out to the CFPB, the international remittance transfer (IRT) final rule has crippled credit union participation in this market. According to a survey of CUNA members, this rule caused almost half of credit unions offering remittance services to their members to either to stop offering remittances or to reduce the number them. 

Despite exemptions in the mortgage rules for smaller credit unions, these exemptions are minimal, on the whole. The thousands of pages of new regulations from CFPB are a continuing burden on credit union operations. The CFPB has an important opportunity to provide more consequential relief to credit unions during upcoming rulemakings on payday lending, debt collection, and overdraft protection.  

Source: Removing Barriers Blog