“The Consumer Bureau is well aware that credit unions were not one of the causes of the recent financial crisis,” Cordray said in his GAC remarks. “You were not underwriting the bad loans that brought down the housing market. Instead, you were sounding the alarm bells well before the sinking of the economy. And you were upholding sound underwriting standards even though you lost customers and market share to the financial predators.”
“We believe that credit unions and the Consumer Bureau see the world the same way: consumers who understand their options, weigh choices appropriately, and make sound decisions are good for responsible businesses and for the economy as a whole,” said Cordray.
Cordray, who has been fighting Republican critics of the new consumer agency, said he has been meeting regularly with representatives of credit unions and banks since he was appointed to head the agency last year to discuss potential rules and regulations aimed at protecting consumers form predatory practices.
That has resulted in a variety of exemptions to new rules provided to credit unions by the CFPB, such as on mortgage lending, Cordray said. “Specifically, firms that service 5,000 or fewer mortgage loans that were originated or owned by the servicer itself or its affiliates, are exempted from large chunks of our servicing rules. We estimate that this covers about 98% of credit unions, exempting them from, among other provisions, the periodic statement requirement, the general servicing policies and procedures, and most of the loss mitigation provisions.”
“We have travelled across the country listening closely to you. And you have come to see us and speak with us. In the last six months alone, we have met with 28 state credit union associations. When we have held field hearings around the nation, in places as diverse as Sioux Falls and St. Louis, we have made it a point to spend time meeting with local credit unions,” he stated.
Cordray’s appointment to a full five-year term directing the CFPB has been held up by Republican senators who insist that President Obama and Senate Democrats agree to change the structure of the agency’s governance and funding before they vote on a permanent director. So President Obama seated Cordray last year as a temporary recess appointment, but that appointment and the legality of the new mortgage and credit card rules approved by the CFPB are now threatened by a federal court decision striking down Obama’s recess appointments.