Glory LeDu, a regulatory and legislative affairs specialist for the Michigan Credit Union League & Affiliates, recently said that credit unions both large and small have been negatively affected by the onslaught of new CFPB rules.
LeDu said credit unions have not been at the forefront of class-action lawsuits and violating federal law because “they typically do everything they can to protect members,” adding that many in the credit union industry have said the “broad application” of the CFPB’s new rules is not fair because the institutions did not contribute to the financial crisis.
“Credit unions will continue to be painted with the same broad regulatory brush that has brought sweeping changes to the nation’s financial institutions, large and small,” LeDu said in MCUL’s February edition of “Contact.” “These resulting regulations provide massive amounts of compliance requirements and general uncertainty in the mortgage market. Some credit unions are in the uncomfortable position of having to make internal decisions about discontinuing products because the compliance requirements are too much to interpret, afford and comply with, which will reduce choice in the marketplace.”
According to LeDu, Michigan credit unions of all sizes have reported increased costs related to compliance staff, and new disclosure requirements will also mean increased costs for changes to loan documents.
“Credit unions are having to turn away members, forcing them to seek loan products elsewhere,” LeDu said. “Where do members go when they cannot obtain a product or service through their credit union? Unfortunately, the answer is typically a higher-priced alternative. As a ‘consumer protection’ agency, the CFPB needs to be cognizant of the impact of the new regulations.”