Mar 13 2014

Is the CFPB Listening? Credit Unions Under Dodd-Frank

Report  
Number  
323

Despite a natural affinity for credit unions, the CFPB’s early rule making suggests that will treat them much the same as other firms. Credit unions can best appeal to the CFPB by structuring arguments in terms of consumer benefit, supporting claims with clear data, and being patient.

Andrew Turner
Andrew Turner
Legal Research and Writing Faculty
University of Wisconsin Law School
Report Number 323

Executive Summary

The Consumer Financial Protection Bureau (CFPB) is either, in Paul Krugman’s words, “a shining example of how to do it right” or, according to Alex Pollock, “a body with . . . unfettered discretion to threaten and coerce.” Maybe both. But regardless of where the CFPB lives on that spectrum, it is here to stay, and its effects on credit unions are already trickling down into everyday products and services.

What is the research about?

This research goes beyond the rhetoric about what the CFPB should (and should not) be doing. The bureau is a muscular presence in today’s market and Filene set out to examine how responsive it has been to credit union input.

While the bureau has a commendable track record of listening to credit union concerns and including those concerns in rule making deliberations, the CFPB has not, to date, been very responsive to those concerns. Author Andrew Turner, of the University of Wisconsin Law School, uses the examples of rule making around the Equal Credit Opportunity Act (ECOA), the small servicer exemption to mortgage rules, and the remittance safe harbor threshold to show that the bureau pays attention to credit union concerns, but that its listening has not turned into substantially different treatment for credit unions.

What are the credit union implications?

Credit unions should be concerned and attentive, but they should not throw up their hands. Turner offers succinct advice about how best to convince the CFPB to acknowledge and account for credit union concerns:

  • Structure arguments around consumer benefits. Rule makers at the CFPB are most likely to respond to arguments that use consumers, not the credit unions that serve them, as the starting point.
  • Support arguments with empirical evidence. Even more than other regulators, CFPB has a mandate and an inclination to use data in its decision making, and commenters that provide it will get a better hearing.
  • Play the long game. Congress is unlikely to significantly modify Dodd-Frank or the CFPB, and credit unions have an opportunity to frame their long-standing member advocacy as parallel to the mission of the CFPB