U.S. Sen. Susan Collins once again showed great leadership and demonstrated her support of Maine’s credit unions and other local financial institutions by voting to repeal the Consumer Financial Protection Bureau’s arbitration rule.
Recently, I was part of a group of local credit union officials who met with her and discussed that issue at length. We spoke about her concerns that the CFPB did not differentiate between credit unions and smaller financial institutions and big banks when it issued the rule. Prior to the CFPB issuing the rule, 399 members of Congress, including Sen. Collins, also signed a letter to the CFPB asking it to tailor rules to address bad actors and to limit the impact on credit unions and community banks — a request that was not addressed in the final rule. If it had, the outcome and our position might have been different.
While some have criticized her vote as anti-consumer (Lisa Gilbert, Sun Journal, Nov. 5), I believe her vote was decidedly pro-consumer. As not-for-profit, financial cooperatives, owned and operated by our member-owners, credit unions have a long history of prioritizing the needs of members above all else. Had the rule fully gone into effect, it would have emboldened trial lawyers to seek out frivolous lawsuits, which so often generates large legal bills benefiting themselves, but can provide minimal relief to those they represent. Because credit unions are owned by their members, the burden of the higher legal costs would have been borne directly by members.
In the extremely rare circumstance that a credit union would use or enforce the arbitration clause, it can be an effective method to ensure that the interests of the members and those of the credit union itself are protected when disputes arise. Having the option of an arbitration clause gives consumers, credit unions and their members an opportunity to stay out of the courts, thus adding a layer of protection for all members’ pooled resources. The member ownership structure of credit unions means we tend to pull out all the stops to work with members who may find themselves in a dispute with their credit union in order to come to a solution that is good for everyone.
We understand the important place regulations have in our industry, but the CFPB’s one-size-fits-all approach fails to recognize that credit unions are different from Wall Street banks.
Because of Sen. Collins’ vote, credit unions can continue to work with their members on legal matters in ways that are fair for all involved. The arbitration rule would have been harmful to the very consumers it was supposed to help.
We thank Sen. Collins for her vote to protect the resources of the nearly 700,000 Maine consumers who are credit union members.
Todd Mason, Westbrook
Editor’s note: Mason is the president/CEO of the Maine Credit Union League.