Care About the Rule-Making Process
Whether a rule is proposed or final, CUs should pay attention and get involved.
I have encountered many credit union staff who’ll question why I’m concerned with proposed rules. They often remind me that they don’t really care about rules until the rules are final, so I don’t need to bother talking about them during a compliance training session.
I hope to change their minds. And, if I don’t, it seems the Consumer Financial Protection Bureau (CFPB) will. Proposed rules are important to follow in this compliance environment, and here are just a few reasons.
Money gets everyone’s attention. Regulatory revisions usually affect budgets in some way, whether due to new forms, vendor upgrades, staff training, or other costs. I know very few credit union compliance officers that like to ask the credit union chief financial officer (CFO) for money.
We know how CFOs feel about compliance departments that have no income, right? Well, I would hope it’s easier to ask CFOs for money when they can include the expense in the budget, rather than ask them to allocate a large amount of funds for an unplanned expense.
The CFPB is required to engage in a cost-benefit analysis for a proposed rule. It’s also required to evaluate the impact of a rule on small businesses, including credit unions. Both the cost-benefit analysis and the information provided to the Small Business Review Panel can be helpful to determine what costs your credit union might incur related to the proposed rule.
So, if you’re following proposed rules, you may have an estimate of the costs you should plan for in the next budget cycle and how you may need to allocate resources, such as staff time.
Have you ever read a final rule and concluded there’s no possible way your credit union could execute the rule’s requirements with your current operations? By following proposed rules, you can comment on the operational difficulties in hopes of preventing those provisions from being included in the final rule.
The agencies don’t always understand the practical reality of implementing the rules. The more credit unions can identify the issues ahead of time, the more likely it is the agency might correct them.
In addition, the CFPB is conducting significant consumer testing prior to issuing a proposed rule. Thus, once the proposed rule is issued for comment, the process for finalizing the rule may move fairly quickly, and you want to be ready.
Following the rules
Caring about proposed rules doesn’t mean reading every rule cover to cover. There are easier ways to follow the rules and still achieve the desired results. CUNA provides credit unions with detailed summaries of the proposed rules (visit cuna.org, select “regulations & compliance,” “regulatory advocacy,” and then “regulatory comment calls”).
The NCUA and CFPB make it easy to comment. NCUA accepts comments sent by email to email@example.com. (Find a list of NCUA’s proposed regulations at ncua.gov, select “regulatory, publications, and reports” and then “regulatory and legal resources”).
Proposed CFPB regulations are listed on the CFPB’s website (visit consumerfinance.gov, select “regulations” and then “notice and comment”). The rules still open for comment include a “submit a comment” link at the end. From there it’s easy to tell the CFPB what you like or don’t like about the proposal.
In addition, if you don’t want to submit a comment directly from your credit union, you can always contact CUNA or your state league to discuss your concerns. Your thoughts on the rule can assist the trade associations, who submit comments on behalf of credit unions.
So, even if you haven’t historically cared about proposed rules, now is a good time to start—as there will be a lot to care about soon.