Protect consumers. Stop punishing compliance.

For too long, Washington has treated the debate over the Consumer Financial Protection Bureau as though policymakers must choose between protecting consumers and reducing regulatory burden. That is a false choice.

We can protect consumers through clear, predictable rules. We can punish fraud and abusive practices without subjecting responsible credit unions to duplicative examinations and shifting interpretations. We can preserve an effective consumer watchdog while making it accountable.

That is why the House Financial Services Committee’s CFPB reform discussion draft deserves serious consideration.

The Defense Credit Union Council recently submitted recommendations to Chairman French Hill and Ranking Member Maxine Waters. CFPB reform should strengthen accountability, transparency, regulatory coordination, and due process without weakening consumer protection.

Credit unions are member-owned financial cooperatives. Defense credit unions serve servicemembers, veterans, civilian defense personnel, and military families. Their earnings are returned through lower fees, competitive rates, savings options, and better service.

They should not be regulated as though they are simply smaller versions of Wall Street banks or large nonbank financial companies.

One important reform is also simple: regulators should tell institutions what the rules are before punishing them for violating those rules.

Whenever possible, standards governing unfair, deceptive, or abusive acts or practices should be established through transparent notice-and-comment rulemaking. Enforcement actions should enforce established law, not become vehicles for creating new legal obligations.

If the government wants a new industrywide standard, it should write the rule, publish it, accept comments, analyze the costs, consider its effect on small institutions, and provide a reasonable implementation period. Then it should enforce the rule.

Good-faith compliance should also matter. If a credit union discovers an error, reports it, makes affected members whole, cooperates with regulators, and corrects the underlying problem, it should not be treated like an organization that intentionally conceals misconduct. Civil money penalties should be proportionate to actual consumer harm, intent, compliance history, and the speed of remediation.

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Congress should establish meaningful safe harbors and incentives for voluntary self-reporting. Regulation should encourage institutions to identify problems and fix them, not create a system in which voluntary disclosure merely increases enforcement exposure.

The National Credit Union Administration should be the primary federal consumer-compliance examiner for federally insured credit unions. The NCUA understands the cooperative ownership model, not-for-profit mission, capital requirements, field-of-membership structure, lending authorities, and operating realities of credit unions.

If the NCUA or an appropriate state regulator is already examining a credit union’s compliance with consumer financial laws, the CFPB should not conduct another examination covering the same institution and subject matter.

Two regulators examining a credit union for one issue does not mean consumers are twice as protected. Often, it means twice the burden.

Examinations require staff time, legal review, technology support, document production, management attention, and money. Credit union members absorb those costs.

Every unnecessary compliance dollar is a dollar that cannot be invested in cybersecurity, technology, financial counseling, lower-cost products, expanded lending, or better service.

Congress should establish one lead regulator for credit union examinations and require agencies to rely on one another’s validated findings rather than repeatedly demanding the same information.

Coordination between the CFPB and NCUA must also mean more than checking a consultation box. CFPB regulations that materially affect credit unions should receive meaningful NCUA review before they are proposed and finalized.

Consumer protection, safety and soundness, liquidity, lending, and member access are interconnected. The regulator responsible for the credit union system should have a decisive voice when another agency writes rules affecting it.

Congress should also require the CFPB to regularly prove that its regulations remain necessary and effective. DCUC recommends mandatory reviews of all CFPB regulations every five years, including reconsideration of major rules.

Financial services change rapidly. Technology, consumer behavior, fraud schemes, and payment systems evolve. Yet regulations can remain untouched for decades.

A serious retrospective review should determine whether a rule still addresses a demonstrated harm, duplicates another requirement, has become outdated, disproportionately burdens smaller institutions, limits consumer choice, or can be simplified. The answer should sometimes be to retain a rule, sometimes to amend it, and sometimes to repeal it.

The same principle should guide new rulemaking. Every significant CFPB proposal affecting credit unions should include comprehensive economic analysis and meaningful small-entity review. Requirements should be tailored to institutional size, complexity, business model, and risk.

That tailoring is especially important for responsible small-dollar lending. Credit unions are well positioned to help members facing emergency travel, vehicle repairs, housing costs, delayed reimbursements, or permanent-change-of-station expenses. Congress should create a framework in which credit unions can offer reasonably priced small-dollar products without a compliance infrastructure manageable only by the largest institutions.

Finally, complaints involving credit unions should be managed by the NCUA, which has the expertise to investigate them and identify broader patterns. Complaint data can still be shared in aggregate to identify trends, but unverified institution-specific narratives should not be publicly posted before a credit union has a fair opportunity to respond.

CFPB reform should not be about weakening consumer protection. It should be about making consumer protection work better.

Clear rules are easier to follow. Coordinated supervision is more effective than duplication. Proportionate enforcement encourages compliance. Regular review prevents outdated requirements from becoming permanent. Tailored regulation preserves competition and access to responsible financial products.

Congress has an opportunity to build a CFPB framework that protects consumers, targets genuine misconduct, respects prudential regulators, and recognizes the credit union difference.

That is not deregulation. It is better regulation.

Jason Stverak is Chief Advocacy Officer for the Defense Credit Union Council, a role he assumed in April 2024. He previously served as Deputy Chief Advocacy Officer for Federal Government Affairs at America’s Credit Unions and was interim chief advocacy officer in 2022 and 2023. Earlier in his career, he was deputy chief of staff to Senator Kevin Cramer and held senior legislative roles in Congress and advocacy organizations. A prominent voice on Capitol Hill, Stverak is a frequent media contributor and has been recognized as a top lobbyist by The Hill and the National Institute for Lobbying and Ethics.