On February 8, the CFPB held a joint Town Hall Meeting with NCUA, which was webcast. NCUA will not be archiving it for several weeks, so we wanted to provide a short summary.
Director Cordray spoke first about the CFPB’s plans and issues affecting credit unions, followed by a question and answer session. He first noted that only three credit unions are currently subject to CFPB supervisory and examination jurisdiction (as they have $10 billion or more in assets), but that he understands some of CFPB’s rulemaking under its regulatory authority will likely reach credit unions with less than $10 billion in assets. He applauded the credit union model, stating that it is a “terrific model” as it is community-oriented, as credit unions are attuned to members’ needs and the overall issues affecting the communities in which they operate.
Mr. Cordray also reiterated his understanding that credit unions had “nothing to do” with the financial crisis, although many of the consequences of the crisis have affected credit unions’ ability to conduct business (the credit crunch, for example). Mr. Cordray announced that the CFPB and NCUA have entered into a memorandum of understanding wherein the agencies will cooperate to prevent overlapping jurisdiction. The agencies are already directing consumer complaints to the correct agency for resolution (to the CFPB for credit unions with $10 billion or more in assets, and to NCUA for those under $10 billion). He also announced that the CFPB is currently in the process of setting up its Credit Union Advisory Committee, which he anticipates will include representatives from 15-20 credit unions representing a diverse range of perspectives. CUNA will be working with Leagues to develop a list of nominees.
With regards to the CFPB’s regulatory plans, he stated that the CFPB plans to adhere to the statutory deadlines set forth by the Dodd-Frank Act, which means that most rules required under the statute will be implemented by January 2013. In implementing the rules, he pledged to be sensitive to the impact of the rules on credit unions of varying asset sizes. He hopes that credit unions will continue to come forward with comments, bringing compliance and regulatory burden issues to the CFPB’s attention.Mr. Cordray noted that CUNA had brought to his attention the need for clarification and guidance on multi-featured open-ended lending issues under Regulation Z, as he was not previously aware of such issues. He said that the CFPB now plans to look into how it can provide additional guidance and clarification under Regulation Z.
NCUA Chairman Debbie Matz then spoke about issues directly related to credit unions. While she claimed that NCUA is trying to reduce regulatory burden and streamline regulations, especially with its recent rulemakings, CUNA has urged the agency to do much more to actually address the unfavorable regulatory environment that credit unions are in, largely due to actions and examination practices from NCUA. Ms. Matz said that the recent TDR proposal is designed to ensure members can keep their homes by agreeing to certain terms with credit unions, and to eliminate the need for manual tracking of TDRs. She also mentioned that the NCUA tried to give credit unions plenty of time to implement the new interest rate risk (IRR) policy rule, that the NCUA tailored the rule to include only certain credit unions, and that it gave credit unions the flexibility to develop their own policy.
Ms. Matz discussed the upcoming CUSO rule, noting that it will be very different from the proposed rule, and it will only affect CUSOs in areas that pose the highest risk to credit unions (lending and IT). CUNA has been aggressively pushing NCUA to improve the CUSO proposal.
Finally, she said that NCUA is working on increasing access to emergency liquidity for credit unions in light of NCUA's winding down of U.S. Central.