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Compliance CFPB will affect CUs
WASHINGTON (3/9/11)—While all but the three largest credit unions do not fall under the enforcement authority of the new Consumer Financial Protection Bureau (CFPB) established by the Dodd-Frank Act, credit unions will be affected as the CFPB works to increase consumer protections in the financial world. The bureau, officially to begin its operations on July 21, is currently under the auspices of the U.S. Treasury Department, which is getting the bureau off the ground until the Senate confirms a director. As Kathy Thompson, Credit Union National Association (CUNA) senior vice president for compliance says in a March article in CUNA’s Credit Union Magazine, Treasury envisions the CFPB “will look out for people as they borrow money or use other financial services.” The CFPB will also monitor the financial marketplace to ensure markets “work as transparently as they can for consumers.” “This is a sweeping mandate for the CFPB and raises questions about how this new agency will affect credit unions,” Thompson writes, and she pens “10 points credit unions should know about the CFPB.” Some of the ten points identified by Thompson include:
* Funding: It has been an issue from the start. CUNA adamantly opposed any plan that would make credit unions partly responsible for the funding. The solution was to make the CFPB part of the Fed, which covers expenses primarily from the income its large portfolio of federal government securities generates. What the Fed doesn’t spend, it returns to the Treasury. So taxpayers will pay for the CFPB operations but not through the normal appropriations process —but this could be revisited by Congress. * Staffing: Most of the new agency’s staff will transfer from existing federal agencies, most notably from the Federal Reserve Board’s Consumer Affairs Division—the group that already writes most of the rules implementing federal consumer protection laws. As the financial crisis unfolded, the Fed and other agencies became more active in rewriting consumer regulations, and credit unions must expect more, not fewer, consumer regulations in the next few years. * Examinations. The CFPB has “exclusive authority” for examinations of banks and credit unions with more than $10 billion in assets for compliance with the laws it oversees. Three credit unions currently have more than $10 billion in assets, and the bureau must coordinate its exam schedule with the National Credit Union Administration (NCUA) or state regulators. This does not mean, however, that other credit unions can expect the bureau to be hands-off. For instance, CFPB will have access to all examination reports, regardless of credit unions’ size or charter. This is another reason to expect consistent—and undoubtedly more detailed—consumer protection exams by NCUA and state regulators. * Enforcement. The new bureau also will have “exclusive” enforcement of the consumer laws under its jurisdiction for the three credit unions with more than $10 billion in assets as well as for privately insured credit unions. For federally insured credit unions with less than $10 billion in assets, NCUA will maintain enforcement authority, but NCUA can refer a problem to the bureau, which can initiate the enforcement action. And if the bureau spots a compliance problem, it can ask NCUA to investigate.
This is just a quick glimpse of some of Thompson’s observations and CUNA members can access the entire article using the resource link below.


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