Credit unions, community banks see some upside to nonbank regulation
Credit unions and independent community banks have long advocated for a balanced structure for the Consumer Financial Protection Bureau and the inclusion of nonbank firms in any new regulatory scheme. The appointment of Richard Cordray to lead the new regulator drew both positive and cautionary reaction from trade groups representing these small banks. The Credit Union National Association said it remains committed to its purpose of ensuring credit unions, which are owned by consumers, are not unfairly impacted by new regulations. "The fact that the agency now has a director holds ramifications for credit unions, other financial institutions and financial service providers that have been unregulated at the federal level before now," said CUNA President and CEO Bill Cheney. "We will be meeting with Mr. Cordray again shortly to reinforce that credit unions are consumer-owned cooperatives and that credit unions need meaningful regulatory relief, not new regulations, in order to protect consumers." The Independent Community Bankers of America said it "will continue to weigh in with the CFPB to promote and protect the interest of the nation's more than 7,000 community banks." "From the onset of the financial reform debate, ICBA consistently preferred a more balanced structure for the CFPB and fought to ensure that the nonbank providers of consumer financial products and services were included under the same rules, oversight and examination as banks," the group said, On Thursday, the CFPB said it now possesses the authority to regulate nonbanks that provide consumer financial services. Cordray noted in a speech Thursday that nonbank firms, which include certain mortgage lenders and payday loan firms, created an unbalanced market based on excessive risk that disfavored credit unions and smaller banks. "In the run-up to the financial crisis, many unsupervised firms led a race to the bottom that pushed aside responsible businesses, including community banks and credit unions, and greatly harmed consumers," Cordray said. "Now that they have the authority with this appointment, we expect the CFPB will focus on the entities that truly need regulation,” said Fred Becker, president and CEO of the National Association of Federal Credit Unions. Write to Kerri Panchuk.