You could say Travis CU General Counsel Michael Levy is perhaps a natural fit for serving on the Consumer Financial Protection Bureau’s (CFPB) Credit Union Advisory Council (CUAC). During his 30 years as an attorney, he’s amassed a diverse portfolio of litigation experience in the public and private sectors within some of the most complex fields of law, as well as matters affecting public policy.

With Congress confirming Rohit Chopra as director of the bureau earlier this year, the CFPB is expected to ramp up regulatory and consumer-protection initiatives. Levy says he is “delighted” Chopra and CFPB Acting Director Dave Uejio have welcomed insight from the credit union community.

That’s because the number of complaints collected by the CFPB about credit or consumer reporting, debt collection, credit card, checking accounts, savings accounts, and mortgage servicing were staggering in 2020. Levy says this shows there is “much work to be done” to ensure the financial industry’s practices are fair to consumers, promoting a vibrant and healthy economy — not just for the few, but for everyone.

“But not all financial institutions are the same,” he added. “It is important that the CFPB’s activities contemplate the different relationships credit unions have with their members. Our community-centric purpose sets us apart from the corporate institutions that currently occupy most of the market.”

Levy has served in general and deputy-general legal counsel roles at a number of California state agencies responsible for regulating essential natural resources, public resources, and consumer services (including energy, water, and insurance). This includes acting as director of litigation for the California Department of Insurance, the largest consumer protection agency in the state supervising the fourth-largest insurance market in the world.

CU Weekly was honored to interview Levy about what he can “bring to the table” as a member of the CUAC on behalf of credit unions under $10 billion that may be directly or indirectly impacted by the bureau’s regulations and rulemaking going forward. Levy will serve from October 2021 – October 2023: 

How do you view the distinction in the CFPB’s role today as it relates to credit unions versus other players in the financial services industry?

One of the key lessons I’ve learned across my career is that consumer protection is enhanced when market stability is supported through fairly-applied and predictable regulation. Whether a regulatory structure provides incentives or barriers to innovation for the public good can depend on the nature of the regulated interest. Involvement from stakeholders from diverse communities is key to an effective construct that actually supports consumers while minimizing unintended consequences.

The CFPB’s activities are no exception. I hope to bring that ethic and the unique perspective of credit unions to the attention of federal regulatory authorities governing the financial industry to ensure credit unions receive an even playing field. Regulatory initiatives need to affirmatively recognize the value credit unions provide to our members and our deliberate purpose in doing so.

I embrace the CFPB’s interest in consumer protection. Unfortunately, many consumers are not provided opportunities for education regarding financial planning and debt, or debt collection, credit reporting, and the practical consequences of their FICO score. More people will benefit from understanding financial incentives involved in much of the industry that often interfere with the customers’ best interests. Many facets of financial industry practices remain opaque, especially practices that can excessively benefit stockholders. That is a structural conflict of interest that not-for-profit credit unions do not have and will benefit from sharing.

So while the CFPB properly pursues broader regulation in the public interest, it is important the bureau remain cognizant of the differing construct of credit unions and our fundamental raison d’être — “people helping people.”

What do you hope to accomplish by serving on the CFPB’s Credit Union Advisory Council?

The Credit Union Advisory Council works hard to advocate and help implement changes for the credit union world. A number of credit union-specific issues are on my radar, not the least of which is advocating for liberalized field-of-membership restrictions that inhibit our ability to compete amid the world’s ever-developing digital banking paradigm.

More pressing, however, is helping facilitate recovery from the persistent economic impacts of the COVID-19 pandemic. Lingering unemployment, business and school closures, supply-chain disruptions, risk of eviction to tenants, eviction moratoria to landlords, and the ripples from all of these issues continue to strain many sectors of our nation’s economy. Of course, these impacts have revealed the effects of decades of income inequality and unequal access to basic education and health care.

Over the last year and a half, we have lost many small businesses across our communities, the backbone of our Main Streets — and their loss is certain to leave a scar on the economy for years to come. All of this continues at a time when college and homeownership had already become cost-prohibitive to ordinary Americans, and retirement for many has been pushed out of reach.

Meanwhile, fintech continues to revolutionize the industry in advance of regulatory oversight analogous to those supervising traditional institutions. Cryptocurrency has emerged as a variably-priced competitor to what it pejoratively refers to as the “fiat” (government-backed) currencies at the same time that it remains the choice of those who rely upon opaque transactions. The pandemic has propelled consumers’ heavy reliance upon digital banking as the routine. This has transpired even as the eldest in our communities are increasingly isolated and at risk of financial abuse, and people’s life-savings has become as accessible as the satchel of gold coins a 19th Century cowboy might have tied to a saddle on the back of a horse.

The CFPB intends to be fundamental in developing a financial industry that protects consumers, and an economy that supports everyone and upon which everyone can rely irrespective of their station in life or social status. Credit unions should naturally be part of that paradigm because that is why we exist. By offering our service and insight to the CFPB, we can ensure the bureau remains aware that financial institutions are heterogeneous, dissimilarly situated, serve diverse populations, and that the innovations proposed by credit unions are given full consideration.

Travis Credit Union intends to be a leader directly helping the communities we serve. We welcome the opportunity to assist the CFPB in its mission to protect all consumers and to foster stability and an even playing field in the markets that we and all credit unions operate.

What is the top issue for credit unions when it comes to the impact (or potential impact) of CFPB rules, regulations, guidance, or anything else? And why?

If there’s one overarching issue, it is that credit unions are not banks. Credit unions’ fundamental purpose is to benefit the people we serve, and regulations that target excesses of institutions beholden to stockholders are not always appropriate to member-centric cooperative institutions.

In that context, all consumer protection regulations and market innovations require a high degree of attention to ensure the bureau’s initiatives actually benefit consumers and do not interfere with beneficial products or services we can offer.

The CFPB has regulatory authority over 19 enumerated consumer protection laws covering everything from deposits and credit, to loan servicing and collections, to consumer data and privacy. All of these laws can have a significant effect on our ability to support our members. 

How do you view the role of credit unions operating in California that now answer to two consumer protection regulatory agencies: the CFPB, and most recently the California Department of Financial Protection and Innovation (DFPI)?

California credit unions are subject to significant regulatory oversight. At times, it can become burdensome to respond to overlapping regulatory requirements. When state and federal regulations conflict, it can be challenging to have to reach out to regulators and industry partners to navigate the requirements and chart a course of action that protects our credit union, and in turn protects the membership that makes our credit union. 

I will say that much of my public service career has involved the dual federal-state regulatory paradigm, and the challenges credit unions face in that regard are not unique to our industry. Oversight from multiple regulatory bodies also results in more frequent examinations, which are often expensive and duplicative. Since Travis Credit Union hasn’t yet reached the $10 billion threshold, our primary federal oversight is by the National Credit Union Administration (NCUA), though we are all subject to the CFPB’s regulations. 

I appreciate that at Travis Credit Union, we understand this is an obligation of a California credit union. We see it as part of the overall risk-management process inherent within the financial industry, which is required for us to serve our members. Also, it protects us, enabling us to fairly compete with other institutions. As such, our goal is to maintain constructive relationships with all of our regulators. These relationships not only allow us to have a voice at the table when there’s an issue that needs to be resolved, but to be considered as a trusted partner when sharing key concerns and perspectives with regulators.

Travis Credit Union’s goal is to improve lives and uplift communities through various financial education, financial literacy, and financial advocacy programs we call our “Awesome Cause.” We counsel members and their communities regardless of socioeconomic backgrounds, supporting their efforts toward financial wellness. To achieve a satisfactory balance of the needs of members and regulatory stakeholders, we rely on our regulators and advisory bodies like the Credit Union Advisory Council. I am looking forward to my tenure on the CUAC to share information ensuring proper governance, a fair playing field, and avoidance of unintended consequences that end up hurting the people we serve.