CUs’ Regulatory Burden Will Be Our Focus

Survey results on CUs’ exam issues will guide us in working with regulators.

February 18, 2013

Last month we began collating the results of a national survey of credit unions about their experiences with regulatory examinations.

The aim of the survey: to clearly understand the current state of the credit union exam process and to ensure we most effectively represent credit unions in discussions with their regulators—NCUA and state supervisory authorities.

The survey is just the latest undertaking by CUNA and the leagues to advocate on behalf of credit unions before regulators about exam-related issues.

And those efforts are directly linked to our determination to reduce the regulatory burden on credit unions.

The results of the survey, which we hope to complete tabulating soon, will serve as a guide and a tool for credit unions, leagues, and CUNA for use in working with regulators.

The results aren’t meant as a “gotcha” when discussing issues with regulators—in fact, the survey can and most likely will uncover what’s going right in the examination process as well as any problem areas credit unions report. For example, the survey results can create a record of NCUA examination trends, so credit unions can see from survey to survey regulators’ points of emphasis. 

The results also can unveil areas primed for regulatory relief and give credit unions the information to deal with emerging issues.

We’re eagerly anticipating the survey’s results, because we believe they’ll be an important cornerstone of our efforts to secure regulatory relief for credit unions throughout the year.

In fact, our strategy for 2013 in reducing the regulatory burden is to continue pressing to limit restrictive rules while advocating for more latitude for well-managed credit unions. These actions will build on the efforts we undertook in 2012—turning back, delaying, or improving a number of regulatory proposals.

A key to that strategy: Contain new, stringent requirements applied across the board. With NCUA, this means minimizing the impact of rules on liquidity risk, credit union service organizations, and loan participations. In our view, the regulator should significantly alter these proposals, if not outright withdraw them.

“In today’s overregulated environment,” CUNA states in its loan participation comment letter, “this proposal would add to the regulatory burden of affected credit unions in a manner that’s wholly disproportionate to the risks associated with loan participations.”

We also believe NCUA should give well-run credit unions more regulatory flexibility, especially in the areas of member business loans and derivatives for hedging interest-rate risk.

The agency has improved its examination process recently—but it can do more to address deficiencies in the appeals process, and hold the line on operating costs.

NCUA issues aren’t the only regulatory challenges presented to credit unions—and might not even represent the greatest ones. The Consumer Financial Protection Bureau (CFPB), in following the orders of Congress, includes credit unions in a number of rule makings, such as new rules on remittances and mortgage-related issues.

Our goal: Minimize the impact of these proposals—or, even better, exempt credit unions from some of the proposals’ key provisions.

We also have an opportunity to stimulate some favorable outcomes on proposals we expect from CFPB this year, such as proposals on overdraft protection and deposit account disclosures. These are still in the development stage, but we think credit unions can have a significant impact on them.

And, we’ll urge Congress to exercise greater oversight on regulatory issues—to ensure accountability for agency actions.

Finally, we’ll ensure our members know what we’re doing to reduce their regulatory burden—so they can join us as advocates; provide us with their timely input; and understand the power of CUNA, the leagues, and credit unions working together.

BILL CHENEY is CUNA’s president/CEO.