Credit Union Execs Find Silver Lining in Consumer Financial Protection Bureau
By Gina Ragusa Credit Unions Online
Truliant Federal Credit Union President/CEO Marcus Schaefer (Winston-Salem, North Carolina) wanted to make his position clear about the formation of the Consumer Financial Protection Bureau (CFPB)--cautious optimism.
As reported in a Credit Union Times article last month, Schaefer was portrayed as a CEO worried that the CFPB would, "...issue regulations that will cause his $1.1 billion credit union to have to spend more time on compliance issues and less time helping members manage their financial affairs."
When approached by Credit Unions Online, Schaefer was relieved to be able to clear the misconception that he was "fearful," as he was portrayed in the previous piece.
"We've had a conversation going with CFPB for some time and are actually very pleased with this type of outreach. There's been a lot of round table idea exchange and discussion between team members such as Elizabeth Warren and other credit unions, so I certainly don't feel 'fearful' or believe that the CFPB intends to damage the credit union industry."
Earle Shelner, VP/Finance from Educational Community Credit Union (Kalamazoo, Michigan) echoes Schaefer's sentiment about the CFPB's direction. He says, "I think that the CFPB could be an excellent resource for consumers if it doesn't get bogged down. I think their mission only helps credit unions if done properly. Their focus is letting the consumer know the price and risk upfront and then make offers easy to compare."
Although Shelner has not worked directly with the CFPB, he says that from looking at the CFPB's website, it appears that the group is being totally upfront on projects they are working on and asking for feedback.
Credit Unions Take a Cautiously Optimistic Approach
That being said, Schaefer said that any regulatory changes may produce growing pains. He explains that any time outside forces mandate additional disclosures for the benefit of the consumer, costs and manpower needed to power those disclosures may impact the consumer in the long run.
"To be clear, the CFBP has been very communicative--they've taken a lot of input from us and while they mean well, they may not fully understand the impact of what it means to implement these changes."
He says that when new disclosures are required, the cost must be ultimately passed onto the member. "That could result in lower savings rates and more fees, in addition to the manpower possibly needed to follow up with answering members' questions about new disclosures or regulations."
Shelner believes that although it will cost money to get new forms and systems in place, he thinks credit unions win all around. "Specifically for mortgages and credit cards, people can get offers, but they are so varied, how does one know the actual cost."
In fact Schaefer uses the credit card offer in a box regulation as an example of how the CFPB could actually improve the member's experience. "In the past, consumers would have to read pages of disclosures to find out what exactly they were getting with credit card offers. Regulatory changes simplified the process so the important, basic information was included in a concise box. Now the consumer can quickly ascertain what is being offered in order to make an informed decision."
However, to ensure the CFPB proceeds with caution, NAFCU and CUNA crafted letters urging that the group performs due diligence before enacting new regulations.
Schaefer says that the summary from the CUNA letter essentially covers what has been said in meetings with the CFPB.
"Basically, the letter communicates that although we understand that the CFPB has the best of intentions it should be aware of what can be burdensome to credit unions."
Credit Unions May Fare Best Under CFPB
Because of the industry's general transparency with members, both Schaefer and Shelner agree that credit union members may ultimately see a direct benefit from the CFPB.
"Credit unions do not have things to hide and would greatly benefit by having consumers know that they can compare financial institutions offering and make informed decisions," Shelner says.
"Being grounded in credit union philosophy has served members well," Schaefer explains. "We're in a better position because many credit unions have already presented material in a clear, simplified manner."