Richard Cordray, the newly appointed director of the Consumer Financial Protection Bureau, wants consumers to receive fair treatment with credit cards and other financial products.
Last Wednesday, President Obama appointed Richard Cordray, former attorney general for Ohio, as the first director for the newly formed U.S. Consumer Financial Protection Bureau. It’s a position that manages a mighty task: ensuring financial consumers are treated fairly.
In an interview at the Washington D.C.’s Brookings Institution the day after his appointment, Cordray spoke to his ambition, including how the department will field complaints from consumers about credit cards and credit card contracts. He called credit unions “responsible businesses,” hinting that credit unions may be the more consumer friendly institutions in offering credit cards and other products.
“In my view, it was not our community banks, not our credit unions who created the problems that led to that crisis,” Cordray says. “They tend to have a community-based business model. They know their customers, they work with them on a long-term repeat basis. … In many ways it was them being pushed aside by unregulated non-banks (like payday lenders, mortgage servicers and student lenders), that created a lot of the problems. And so going forward, we will be mindful of that as we approach our job.”
Indeed, consumers are increasingly satisfied with credit unions lately, according to a recent survey by Prime Performance. Credit unions led the Prime Performance Index in customer experience with 79% satisfaction, compared with banks consumer experience rating of 59%. The study was based on a survey of 4,934 bank and credit union customer in the Northeast.
Credit unions can keep growing consumer favor by continuing to offer and promote credit cards with lower-than-average APRs, with no or low balance transfer rates and with no or low balance transfer fees, especially as consumers may increase this year along with rising retail sales.
“Whether it is to pay their bills or to finance larger investments in their futures, most people use credit,” Cordray told Brookings. “Credit cards give us quick access to money when we need it.”
While credit unions have advocated for inclusion of nonbanks like payday lenders and mortgage services in regulations, they are also on guard for any increased regulation on credit unions, according to the Credit Union National Association.
"The fact that the agency now has a director holds ramifications for credit unions, other financial institutions and financial service providers that have been unregulated at the federal level before now," Bill Cheney, CUNA president and CEO, said in a statement. "We will be meeting with Mr. Cordray again shortly to reinforce that credit unions are consumer-owned cooperatives and that credit unions need meaningful regulatory relief, not new regulations, in order to protect consumers."