With Biden declared winner, what’s next for credit unions?

The incoming Biden administration could move swiftly to appoint a new director of the Consumer Financial Protection Bureau focused on helping vulnerable consumers who are struggling financially during the pandemic.

CFPB Director Kathy Kraninger is likely to submit her resignation or be fired, according to experts, given that the Supreme Court ruled earlier this year that the bureau’s director can be fired by the president without cause.

In that case, the next director, who may serve on an interim basis until a permanent director is confirmed by Congress, would move immediately to address pandemic-related issues. For example, mortgage servicers, auto lenders and debt collectors could be in the spotlight for how they implement forbearance policies. The three credit bureaus could also come under the microscope.

Whoever Biden nominates to run the agency — the CFPB’s third permanent director in its history — is likely to pursue a robust consumer-focused agenda, including rolling back the regulatory relief granted to payday lenders in a recent rule, strengthening restrictions for debt collectors and ramping up enforcement actions. Helping consumers deal with student loan debt and overdraft fees could also be priorities. Still, it is possible a Biden administration would need to choose a director amenable to Senate Republicans if the GOP holds on to the upper chamber of Congress.

Experts also expect that staff restructurings at the agency under the Trump administration, which deemphasized enforcement actions and fair-lending investigations, will be reversed to revive an Obama-era focus on enforcement. The Biden transition team also may focus on personnel including bringing back some staff who worked under former Director Richard Cordray. Some even believe a Democratic-led CFPB will seek to restore a rule restricting mandatory arbitration clauses, which was repealed by the Republican-led Senate in 2017.

Besides Kraninger at the CFPB and potentially Mark Calabria at the FHFA, Biden may have the chance to appoint a member to the National Credit Union Administration early on in his administration.

President Trump nominated Kyle Hauptman to replace NCUA board member Mark McWatters, whose term expired more than a year ago. However, Hauptman’s confirmation has been slower than initially expected. The Senate Banking Committee approved his appointment in August but it has since stalled.

Now it’s uncertain whether Hauptman will be confirmed by the full Senate before a new Congress takes over in January.

If Hauptman is not confirmed, Biden would be able to select a Democrat and shift the balance of power on the board from two Republicans and one Democrat to two Democrats and one Republican.

McWatters and Chairman Rodney Hood, who was appointed by Trump, are both Republicans while Todd Harper, also a Trump appointee, is currently the lone Democrat on the board.

But it’s also likely that Republicans will retain control of the Senate. That could force Biden to pick someone who is fairly moderate to ensure confirmation.

Even if Hauptman is confirmed, Biden would still get to appoint a board member within his first year in office. Harper’s term expires in August. Another position would not open on the board until Rodney Hood's seat expires in 2023.

Policies designed to bring more Americans into the financial mainstream should get a major boost during the Biden administration.

Specific ideas that are likely to be on the table include offering banking services at U.S. Postal Service locations, curtailing financial institutions’ ability to earn money from overdraft fees, providing universal accounts to all Americans and reforming the credit reporting system.

All of those proposals have been championed by members of the Democratic Party’s progressive wing, including Sens. Bernie Sanders and Elizabeth Warren. The they are likely to draw pushback from banks and credit unions, congressional Republicans and even some moderate Democrats.

The ultimate policy outcomes are hard to predict. A renewed focus on expanding financial inclusion could result in compromise policy outcomes that land to the right of the progressives’ wishes, but to the left of the status quo. Many of the proposals likely also require congressional approval, which would be an uphill climb if the Senate remains in GOP control.

The debates on some of these issues will likely be about whether the private sector can be relied upon to provide remedies and, conversely, the extent to which the federal government should serve as a provider of affordable financial products and services.

For instance, the Biden campaign has embraced the concept of a public credit reporting agency, which would seek to reduce racial disparities in lending. But the former vice president has not endorsed the idea that this new public system would replace the likes of Equifax, Experian and TransUnion, as the progressive think tank Demos has proposed.

Instead, under the Biden plan, a new government-run system would offer competition to the three big private-sector credit bureaus.