News

South Dakota credit unions speak out against rising CFPB regulatory burden

Richard Cordray

Richard Cordray, the director of the Consumer Financial Protection Bureau, and Sen. Tim Johnson (D-S.D.) of the Senate Banking Committee listened to complaints at a roundtable meeting this week regarding the increased compliance requirements for community banks.

At the Sioux Falls, S.D., roundtable, more than 100 managers from banks and credit unions complained that a “mountain of new regulations—18,000 pages over the past three years—coming out of Washington D.C.” is forcing many smaller institutions to merge, as they are unable to bear the costs of compliance, Credit Union Times reports.

“During 2011 we saw five credit unions—almost 10 [percent] of the total—involved in mergers and in each of the five mergers, management and volunteers cited regulatory burden as a primary reason to merge,” Jeff Schmidt, a chairman of the Credit Union Association of the Dakotas’s Governmental Affairs Committee, said, according to Credit Union Times.

Schmidt is also the COO of Voyage Credit Union, the direct result of a 2011 merger. Schmidt spoke directly to Cordray regarding the impact of increasing regulations on small credit unions.

“I am sure that it isn’t a shock to you Mr. Cordray or anyone else at the CFPB that credit unions are subject to substantially more regulation now than just a few years ago, but what I think might surprise you is that of the 46 credit unions left in South Dakota, 24 — more than half — have six employees or less,” Schmidt said, Credit Union Times reports.

Schmidt added that the increasing regulations have overwhelmed the small staffs of these credit unions, pressuring them to seek out mergers.

“These credit unions don’t have an attorney on staff, they don’t have a team of full-time compliance specialists and they don’t have the manpower to read and comment on 18,000 pages of proposed rules, interpretive rulings or policy statements,” Schmidt said, according to Credit Union Times.

Many of the other 100 attendees, some 70 of whom were bank executives, echoed concerns regarding the mergers but also expressed concern regarding the impact of new mortgage regulations on bank operations.

A CUAD spokesman said that the roundtable “was just limited to South Dakota financial institutions,” adding that apparently the CFPB preferred a local viewpoint “rather than bring in North Dakota or Minnesota representatives,” Credit Union Times reports.

One Response to South Dakota credit unions speak out against rising CFPB regulatory burden

  1. Pingback: South Dakota credit unions speak out against rising CFPB … | Investing