The regulatory burden has a price tag--so far--of $56 per credit union member in Georgia, according to a study commissioned by CUNA and cited by Georgia Credit Union Affiliates (GCUA) in a recent Atlantic Business Chronicle article.
The article provides details of how credit unions in Georgia are diverting more funds to cover the costs of federal regulation than ever before.
The regulatory burden has cost Georgia credit unions an estimated $114.2 million, according to the study, conducted by Cornerstone Advisors. Of that total, $94.4 million went directly to pay for increased regulations while the remaining $19.8 million represented lost benefits to credit union members.
“Those increases have come from efforts to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act,” the article says.
Most importantly, it has an impact on consumers, according to Don DeCinque, president/CEO of Atlanta Postal CU. “The cost of the additional employees and the steps required in order to meet the compliance burden comes from the revenue of the credit union. It cannot be passed on to the consumer as credit unions typically do.”
By trying to apply a “one-size-fits-all” approach to regulation Dodd-Frank has placed a burden on small financial institutions, according to Cindy Connelly, GCUA senior vice president for government influence.
“You can see it was clearly aimed at the large financial institutions and not at smaller Main Street institutions,” she said.
Credit unions are paying costs comparable to much larger banks to meet the demands of Dodd-Frank—as evidenced by the more than 6,767 pages of regulatory changes instituted since 2008.
The impacts are significant in terms of the scale of a credit union’s operation, and include costs of staffing, third-party expenses, capital expenses and reduced revenue opportunities. The largest component of regulatory expense was for staff, at 74% of the total, according to the Cornerstone study. One in every four employees’ time is now spent on “regulatory compliance,” the study noted.