News & Information

Advocacy in action: regulation under new scrutiny

by Christine Henzig, Director of Communications Apr 20, 2016

Thanks to ongoing advocacy that has called attention to the increased cost and complexity of regulatory compliance, new questions are being asked about how the financial industry is being regulated.

New scrutiny is coming from

The Government Accountability Office (GAO)

This independent, nonpartisan agency - which works for Congress to analyze how the federal government spends taxpayer dollars -  released a report that recommended

Congress should consider whether additional changes to the financial regulatory structure are needed to reduce or better manage fragmentation and overlap in the oversight of financial institutions and activities to improve: (1) the efficiency and effectiveness of oversight; (2) the consistency of consumer and investor protections; and (3) the consistency of financial oversight for similar institutions, products, risks, and services. For example, Congress could consider consolidating the number of federal agencies involved in overseeing the safety and soundness of depository institutions, combining the entities involved in overseeing the securities and derivatives markets, transferring the remaining prudential regulators' consumer protection authorities over large depository institutions to CFPB." 

"At this point, it is not clear what action if any Congressional leaders will take in response to the recommendation," said League President & CEO Brett Thompson.


Members of Congress - including individuals from Wisconsin's Congressional delegation - have signed letters to regulators. These include a:

  • Letter to the CFPB urging it to exempt credit unions from onerous rules to focus more on bad actors. Six Wisconsin lawmakers were among the 329 signers. CFPB Director Richard Cordray responded in a letter, identifying ways the Bureau has provided relief to small financial entities in rule-making and noting its commitment to ensuring regulations are "well-tailored and effective."

  • Letter to multiple regulatory agencies. Two Wisconsin lawmakers were among the signers who urged better tailoring of regulations to curb their ill effects.

The Courts

The U.S. Court of Appeals for the District of Columbia is hearing a case challenging a CFPB administrative action. In part, the case questions the constitutionality of the CFPB due to its structure. It's being argued that:

  • The CFPB has no structural precedent for its level of authority. Being led by a single director, rather than a five person commission gives its director unilateral authority to bring administrative enforcement actions.

  • The CFPB is unaccountable. Since CFPB is independently funded by the Federal Reserve and only allows the director to be dismissed “for cause,” rather than serving at the pleasure of the president, the CFPB is effectively unaccountable to either Congress or the president.

In another instance, the CFPB was rebuked by a federal district judge who said the agency has no power to investigate an embattled accreditor of for-profit colleges. The ruling marked the first time a court has said the bureau had no jurisdiction and overreached its statutory authority.

The CFPB has visited with Wisconsin credit unions to hear their concerns. The agency recently made changes that reduce regulatory burden on some credit unions' mortgage lending, but additional items remain on its regulatory agenda

Ongoing advocacy 

Regulatory overreach is being addressed through:

"We've seen great success at the state level recently, with unanimous support from the Legislature and Governor Walker to pass enhancements to the state charter. Discussions continue about how to provide regulatory flexibility and updates on other issues for state-chartered credit unions such as business lending," said League Director of Government Affairs Sarah Wainscott. 

"Activists can fuel our momentum at the federal level by participating in our September Hike the Hill in Washington, D.C.," she added. "There is no substitute for credit unions vividly explaining for lawmakers the impact of regulations on their operations and member service."

Wisconsin credit unions come together as a single League to Unite for Good; we remove barriers, increase awareness and foster service excellence. All of these steps help more Americans to see credit unions as their best financial partner and regard their credit union as their primary financial institution. Read more articles in our Unite for Good series.