WASHINGTON (4/10/13, UPDATED 4:45 p.m. ET)--The overwhelming regulatory burden, and the difficulty of raising capital, have made it more difficult for her credit union to reach out effectively to the Hispanic community in her area, the Credit Union National Association's witness told a hearing today on providing credit unions with regulatory relief.
CUNA witness Pamela Stephens, answering questions during the just-recessed House Financial Services subcommittee hearing on credit union regulatory burden, succeeded in putting a face to the human cost of regulatory burden during the extensive question-and-answer session of the hearing.
Stephens, CEO of Security One FCU, Arlington, Texas, emphasized that her credit union is trying to reach out to the Hispanic community in her area, but regulatory burden and difficulty raising capital have made that more difficult. She made an appeal to remove a current restriction that credit unions may only use retained earnings as capital.
Also in response to a question, Stephens emphasized that a one-size-fits-all approach to financial services regulations, where a "Bank of America" and a small institution like a credit union are treated the same--and rules aimed at financial services "bad actors" are applied to community-minded and responsible players like credit unions--impede a credit union's ability to serve all its members.
And, Stephens emphasized, the regulatory burden problem "always gets worse, never gets better."
The Dodd-Frank Act and the creation of the CFPB have created a more difficult regulatory environment for credit unions, she said.
She said it is sometimes hard to understand what some of the regulatory changes are, what they mean, and how to comply. Credit unions like her own are too small to afford the cost of a compliance officer and people like herself spend their nights and evenings wrestling with the copious rules and how to address them.
Also, she argued, "Members do not understand some of the new disclosures…Not many things coming down the pipe have been helpful to consumers now."
The credit union movement is losing around one credit union per day, and a huge part of it has to do with the regulatory burden they face. "If there's not somebody who is going to step to the plate and take care of that, consolidation seems to be the answer," she said.
News Now will have additional hearing coverage in its Thursday issue.