Credit unions see liberal icon Warren as ally against 'regulatory tidal wave'

The nation’s credit unions are looking to one of the financial industry’s harshest critics as a potential ally in the push for relief from a “regulatory tidal wave” generated in response to the 2008 economic recession.

The head of the National Association of Federal Credit Unions (NAFCU) is calling upon Sen. Elizabeth Warren (D-Mass.) to lead efforts in Congress to lay the groundwork for a two-tiered system of regulations that distinguishes between big and small financial institutions.

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Credit unions and community banks argue that they were not to blame for the risky and abusive lending and investment practices that thrust the country into recession, though they are subject to costly new requirements designed to rein in Wall Street.

“Credit unions are facing a regulatory tidal wave,” NAFCU President and CEO Fred Becker wrote Tuesday in a letter to the Massachusetts Democrat. “The plethora of regulations has, among other factors, resulted in the loss of over 700 credit unions in the past four years.”

Becker said a tiered system could take into account differences in the way smaller financial institutions are structured, and the way they operate. 

Becker’s letter to Warren comes in response to remarks Warren made last week during a hearing of the Senate Banking Committee.

Warren, who has been unyielding in her demands for stricter regulation of big banks, raised concerns that smaller institutions are subject to many of hundreds of new rules written in accordance with the Dodd-Frank financial reform law.

The regulations hit smaller banks particularly hard, because they often don’t have the resources to hire attorneys and lobbyists to help them track and comply with new rules as they are issued.

“And so what I'm concerned about is that we now have a regulatory system for which many parts of it are neutral on its face, but the impact on smaller financial institutions that can't afford to hire an army of lawyers to get and interpret these rules turns out to be crushing,” Warren said during the June 13 hearing.