NCUA to CFPB Exempt Large CUs from CFPB Exam and Enforcement Authority

National Credit Union Administration Chairman J. Mark McWatters on July 6 wrote Consumer Financial Protection Bureau (CFPB) Director Richard Cordray to request CFPB provide an exemption for credit unions with assets of more than $10 billion from its examination and enforcement authority.

Section 1025 of the Consumer Financial Protection Act (CFPA) of 2010 gives CFPB primary enforcement authority for consumer financial protection law over insured depository institutions with assets of more than $10 billion.

Currently, six federally insured credit unions (FICUs) — Navy Federal Credit Union, State Employees’ Credit Union, Pentagon Federal Credit Union, Boeing Employees Credit Union, Schools​First Federal Credit Union, and The Golden 1 Credit Union—have assets of $10 billion or more.

McWatters wrote that the CFPB should distinguish between for-profit, investor-owned and -controlled financial institutions versus not-for-profit, member-owned and -controlled financial institutions.

McWatters noted that section 1025 of the CFPA imposes unnecessarily burdensome costs on credit unions.

Moreover, McWatters is critical of the CFPB's use of punitive fines on FICUs, the primary method of enforcement available to the CFPB. I suspect McWatters is referring to the $28.5 million fine assessed on Navy Federal Credit Union for its illegal debt collection practices.

McWatters said this requested change would not affect CFPB’s exclusive rulemaking authority over federally insured credit unions, and the CFPB would still be able to take enforcement action if it determined NCUA was not adequately enforcing consumer protection laws.

But in case the CFPB refuses his request to exempt large FICUs from CFPB examination and enforcement authority, McWatters stated that the CFPB should at least conduct all FICU examinations jointly with the NCUA going forward.

Read the letter.

Read the press release.