Credit unions have focused a lot of their efforts since the financial crisis fighting to make sure they aren’t suffocated by regulation put in place to fix problems they didn’t create.
National Association of Federally-Insured Credit Unions President and CEO Dan Berger wrote a letter to the Senate Banking Committee Chairman Mike Crapo, R-Idaho, and Ranking Member Sherrod Brown, D-Ohio, responding to the committee's call for ideas and proposals on fostering economic growth.
Berger aimed to highlight the economic benefits that credit union regulatory relief would create, explaining the important role credit unions play in the economy and the urgency of granting them more flexibility.
"Credit unions play an essential and vital role in the economic health of local economies," Berger stated. "This was demonstrated during the recent financial crisis when credit unions were able to continue to lend and help creditworthy consumers and small businesses during difficult times, often when no one else would."
Reinforcing calls often made by NAFCU, Berger said, “Despite the fact that credit unions played no part in causing the financial crisis, they are still heavily regulated and affected by many of the regulations that have come from it."
“Unfortunately, every credit union dollar spent on compliance with regulatory burdens is a dollar that can't be used to help consumers through member service, better rates or additional money to lend,” he said.
To underscore exactly how much regulations have impacted credit unions, the letter stated that since the second quarter of 2010, credit unions have lost more than 1,500 federally insured credit unions, which is more than 20% of the industry.
And while it is true that there has been a historical consolidation trend in the industry, the passage of the Dodd-Frank Act has accelerated this trend, the letter stated.
NAFCU once again urged that it believes that credit unions should be exempted from Consumer Financial Protection Bureau rulemaking, with authority returned to the National Credit Union Administration. “As you examine the federal financial regulatory system, we urge to you support such reform,” the letter.
NAFCU also touched areas outside of regulation. In terms of the embattled CFPB, NAFCU suggested that the leadership structure should be changed from a single director to a five-member commission appointed by the president.
Additionally, the letter said it supports measures that would require the CFPB to better tailor its regulations to institutions based on their size and risk, and provide greater review and security.