Credit unions back regulatory overhaul

The National Association of Federal Credit Unions (NAFCU) is throwing its support behind Senate legislation requiring independent agencies to measure the costs of proposed regulations before they are enacted.

Existing rules require executive branch agencies to weigh the benefits of major proposed regulations against the expense of enacting them. But independent agencies — including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Consumer Financial Protection Bureau (CFPB) — are exempt from the requirement.

A bill introduced this week by Sens. Rob Portman (R-Ohio), Mark Warner (D-Va.) and Susan Collins (R-Maine), would authorize the president to bring independent agencies into the same review system that governs other regulators. 

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Credit unions, which have been hit with a cavalcade of new regulations put forth in response to the 2008 economic collapse, stand to benefit from the bill, NAFCU President Fred Becker wrote in a letter to the lawmakers. 

“While the problem is not necessarily any one regulation, the cumulative effect of new regulations piled on top of each other without a study of the impact on small financial institutions can be devastating to credit unions that don’t have an army of compliance attorneys at their disposal,” Becker wrote.

Becker singled out the CFPB and the National Credit Union Administration (NCUA), but said an assortment of regulatory agencies were responsible for proposed rules that would ultimately curtail the financial services available to consumers.

A coalition of consumer rights groups panned the bill, saying it would weaken regulations required by the Dodd-Frank financial reform law and other statutes.

“If this bill had been law last year, new rules protecting consumers from predatory payday loans and abusive mortgage lending practices might never have seen the light of day,” said Gary Kalman, director of federal policy at the Center for Responsible Lending. “Congress shouldn’t be putting up barriers to much-needed and long overdue consumer protections.”

Similar legislation was introduced in the last Congress, prompting pushback from a collection of six independent agencies that would be subject to new restrictions.

“This would give any President unprecedented authority to influence the policy and rulemaking functions of independent regulatory agencies and would constitute a fundamental change in the role of independent regulatory agencies,” the regulators wrote in an October 2012 letter to the sponsors of that bill.