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Over the past ten years that I’ve worked in the credit union movement, I’ve become increasingly convinced that more people would join as members if they knew the benefits credit unions provide consumers. If more people understood the basic not-for-profit, cooperative governance structure that guides credit unions, it should be a no-brainer for consumers. However, most people don’t know why they should care and are never provided with the information to understand the distinction between banks and credit unions. While I fear that Dodd Frank teeters on disclosure/information overload for consumers, some provisions in the new law could help the public better understand the benefits of the credit union model.
Several provisions within Title X of Dodd Frank require the Director of the Consumer Financial Protection Bureau (CFPB) to establish various entities whose function, at least partially, is to provide consumers of various types with information that will enable them to make better informed financial decisions. The CFPB is required to establish an “Office of Service Members Affairs,” whose focus, in part, is to “educate and empower service members and their families to make better informed decisions regarding consumer financial products and services.” Similarly, the CFPB is also required by the new law to create an “Office of Financial Protection for Older Americans.” This office is charged with educating those age 62 and older “on current and future financial choices.” Given the significance of those two consumer groups, seniors and members of the military, it may be worthwhile for the industry to stay in close contact with these groups as they begin their work. If we can educate these sub-agencies of the value credit unions provide to consumers, they may be willing to convey the same message in their work.
The new legislation also mandates the CFPB establishes an Office of Financial Education. The broad goal of that office is to develop “initiatives intended to educate and empower consumers to make better informed financial decisions.” Certainly, credit unions have a place in that discussion. Finally, the CFPB is required to establish a “unit” whose functions shall include “providing information, guidance and technical assistance regarding the offering and provision of consumer financial products or services to traditionally underserved consumers and communities.”
Dodd Frank is going to create significant challenges for credit unions, but the creation of these entities within the CFPB may actually be opportunities.
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