Regulatory Compliance
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What is ‘Small’ According to the CFPB?

If you have been following the activities of the CFPB this year, you have likely noticed some emphasis on the effect the CFPB’s regs will have on small businesses.  They have convened a small business review panel to assess proposed rules and issued a small business compliance guide for the remittance transfer rule, the only final rule the CFPB has issued thus far.  This focus on small businesses is not out of the kindness of the CFPB’s heart.  It is mandated by law – the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). 

Dodd-Frank made the CFPB one of the handful of agencies subject to the SBREFA, which, among other things, requires panels to review regs that will have a significant impact on small businesses and the issuance of guides to help small businesses comply.  This begs the question: what is ‘small’ according to the CFPB?

The CFPB uses the SBA’s threshold of $175 million for depository institutions in determining whether a CU is ‘small.’  That threshold was set over 25 years ago, when the financial institution landscape was significantly different.  The SBA is proposing to raise that threshold to $500 million.  This is an instance where an action by a seemingly unrelated government entity could have an indirect effect on the regulations applicable to credit unions.  Raising the threshold from $175 million to $500 million could bring a different voice to the table in the CFPB’s small business panels.  A lot more credit unions would be included and have a voice in the early, pre-comment stages of the CFPB’s rulemaking.  Hopefully, the more voices that are represented by the panel, the more difficult it will be for the CFPB to marginalize the substantial effect their regulations have on credit unions.

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