WASHINGTON (4/9/14)--Representatives from federal financial regulatory agencies at Tuesday's House Financial Services Committee hearing on regulatory burdens agreed with Rep. Gregory Meeks' (D-N.Y.) assertion that one-size-fits-all regulations are bad for institutions and consumers.
Meeks and committee colleagues questioned representatives from the National Credit Union Administration, Consumer Financial Protection Bureau, Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency during Tuesday's hearing, titled "Who's In Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom."
In his opening statement, NCUA General Counsel Mike McKenna asserted that 70% of new rules approved by the agency since January 2013 have "provided regulatory relief or greater clarity without imposing new compliance costs.
"Since the beginning of 2013, the NCUA board has approved 17 final rules," McKenna said. "Of those, one was required by the Dodd-Frank Act. Five provided regulatory relief. Four addressed safety and soundness matters, and the remaining seven rules were technical in nature," he added.
In response, Credit Union National Association General Counsel Eric Richard said after the hearing that credit unions see things quite differently. "Counting the number of rules and deciding how many were regulatory and how many were de-regulatory is not a viable approach. It is the impact of the rules--not their number--that is the real issue."
During the hearing, McKenna said the agency works hard to balance safety and soundness with regulatory burdens. "NCUA is working to streamline its regulatory framework," he added.
"Through this initiative, the NCUA board has approved four targeted rules to mitigate risk and six rules to cut regulatory burdens. Rather than adopting one-size-fits-all regulations, NCUA targets rules to risk and asset size and strives to ensure rulemaking is reasonable and cost-effective," he said. Examples of these streamlining efforts include the NCUA's ongoing three-year rule review process, examination process revamps and the re-allocation of agency resources to focus on potential risks, he said.
"As we learned from the recent financial crisis," he said, "the cost of inaction can sometimes be greater than the cost of action."
McKenna also commented on the agency's risk-based capital rule during the hearing. (See News Now story: NCUA testifies supplemental capital could be considered as part of RBC plan.)
Speaking on remittance transfer regulations, Rep. Shelley Moore Capito (R-W.Va.) noted that many firms are exiting that business. New Consumer Financial Protection Bureau rules are making it more difficult and more expensive to provide these services, she said. Capito also noted that she and Meeks are crafting a bill that would require regulators to examine their standards for duplicative regulations.
Other topics discussed during the lengthy hearing included: