CUNA versus NCUA: View on Regulatory Burden
During a Tuesday afternoon breakout session at CUNA's Governmental Affairs Conference, Dunn noted that during the financial crisis credit unions were the institutions that "primarily got it right,'' but they are still facing an increased regulatory burden from the NCUA, the Consumer Financial Protection Bureau and other agencies.
She noted that more regulatory agencies are issuing rules impacting credit unions than ever before and that when Congress wrote the Dodd-Frank Act credit unions were "collateral damage.'' Dunn said regulators often try to write regulations based on mistakes during the previous financial crisis, and while this is an understandable trend it sometimes results in overreaching.
Northwest Credit Union Association CEO John Annaloro, who moderated the session, noted that a study by his group found that during the two years following the financial crisis, there were approximately 18,000 pages of new regulations that impacted credit unions in some way. He said this represents a "crushing regulatory burden'' that is "unsustainable for any credit union of any size.''
Gill replied that many of the NCUA's rules were mandated by Congress and many of the documents issued by the agency aren't new rules but explanations of existing ones while others contain information about agency programs aimed at helping credit unions. He also pointed out that of the regulations and documents cited in the study, less than 13% came from the NCUA, and the vast majority came from the Federal Reserve.
He also noted that the agency has increased opportunities for public input, including a series of public listening sessions that begin next week. In addition, when the agency issues regulations it tries to give credit unions some flexibility and avoid a one size fits all approach. The agency has also expanded its regulatory flexibility program so that all credit unions, not just CAMEL 1s and 2s, can take advantage of it.
However, Gill noted that the agency can't go too far in relaxing regulations because that would be abdicating its responsibility for protecting the safety and soundness of the credit union system. He said that $26 billion in assets of member deposits are in credit unions with CAMEL 4 and 5 ratings.
Dunn said that while the NCUA had made improvements in the regulatory process, many credit unions are still unhappy with the way their examinations are handled. She added that CUNA will continue to work with the NCUA to ensure that the agency is clearer in what it wants from credit unions.