Leadership from the 45th president of the United States will be essential in turning back the tide of increasing regulatory burdens facing credit unions, CUNA President/CEO Jim Nussle wrote in a letter for the U.S. Chamber of Commerce. Nussle was invited to participate in the chamber’s “Dear 45” campaign, in which influential leaders write to the next president and outline the importance of certain policies.
“Since passage of Dodd-Frank in 2010, which led to the creation of the Consumer Financial Protection Bureau (CFPB), regulatory costs for credit unions have risen by 39%,” Nussle wrote. “While this hits all of America’s credit unions regardless of size and impacts the financial benefits they extend to members, it hammers small credit unions and the communities they serve particularly hard. That’s because smaller financial institutions lack the scale to spread their regulatory costs across a larger base.
“Typically, they’re forced to dig out from the regulatory blizzard by adding costly staff or reducing services that benefit their members,” Nussle added.
He went on to cite CUNA’s comprehensive regulatory burden study, which showed the regulatory cost impact on the credit union industry was $6.1 billion in 2014 and the lost revenues to credit unions from services that were discontinued or reduced because of added regulation are at least an additional $1.1 billion.
“This total impact of $7.2 billion is equivalent to an astonishing 80% of credit union industry earnings and 6 percent of our credit unions’ net worth,” Nussle wrote.
Dodd-Frank, the Durbin amendment, the CFPB itself and the bureau’s Qualified Mortgage standard are among the regulations having a disproportionate impact on the credit union system, Nussle explained.
“In a bid to clean up a broken financial system, Washington rounded up more than the usual suspects. It threw in innocent entities like credit unions and community banks that played no role in the financial crisis and should have been held harmless,” Nussle wrote. “We recognize that as federally insured financial institutions there will be regulation. However, the recent increase has been excessive, and we would provide more benefit to our members and our communities if we spent less on compliance and more on member services: lower interest rates for consumers buying a house or a car, and higher interest rates on savings.”
Nussle closed by telling the future president that CUNA, state leagues and credit unions are “ready to work with your administration to roll back laws that are causing the damage to credit unions and other smaller institutions, or to at least exempt them from these laws.”