CUNA's Qualified Opposition to Dodd Frank Act

In a June 23 letter to Congress, the Credit Union National Association (CUNA) made it clear that if the debit interchange fee language was not part of the financial reform legislation, it "would not oppose H.R. 4173."

This means that CUNA was willing to accept increased regulatory burden for credit unions, if the Durbin interchange amendment was dropped. Why did CUNA do this?

However, CUNA's own analysis shows that this legislation will result in 35 new rules affecting credit unions. And the number of potential rules could grow as the new Bureau for Consumer Financial Protection ramps up.

I pointed out to credit union directors and executives at the 33rd Annual National Directors' Convention in Las Vegas the huge threat this new Consumer Bureau poses to their institutions.

"All banks and credit unions – large and small – will be required to comply with rules and regulations set by this new Consumer Bureau, including rules that identify what the bureau considers to be “unfair, deceptive, or abusive.” This agency will have broad powers to dictate the terms for everything from mortgages and credit cards to checking accounts and debit cards.

This new Consumer Bureau can require credit unions and community banks to submit whatever information it decides it needs and can examine community banks and credit unions at its discretion on a “sampling basis.” Thus, the new legislation will result in enormous new compliance burdens for banks and credit unions and a new regulator looking over your shoulders.

All banks and credit unions, regardless of size, will have to comply with extensive new disclosure and reporting requirements created by the bill. For instance, this new agency is given sweeping authority to require whatever disclosures it thinks are necessary to permit consumers to understand “the costs, benefits, and risks associated with the product or service, in light of the facts and circumstances.”

Moreover, this new Consumer Bureau will not have to take into consideration the safety and soundness implications of its new rules and regulations it proposes."

I do not know what political calculus went into CUNA's decision to say it would not oppose the bill, if it had been minus the Durbin interchange language.

But I think there were enough problems with the Dodd-Frank Act and the new burdens it would impose on banks and credit unions alike to warrant opposition even if the Durbin amendment had not been part of the bill.