CHARLOTTESVILLE, Va. (3/2/16)--In an interview with S&P Global Market Intelligence, Alabama CU CEO Steve Swofford detailed the effects of increased regulation on the Tuscaloosa, Ala.-based credit union.
“I knew it was a huge burden because I see it every day. It restricts us from doing the things that we want to do,” Swofford told S&P.
Alabama CU was one of three credit unions that took part in a regulatory burden study commissioned by the Credit Union National Association and performed by Cornerstone Advisors. The Feb. 29 interview accompanied a full feature story by author Ken McCarthy on the study.
The cost to credit unions--$7.2 billion diverted from services in 2014 alone--took Swofford aback. In answering the question “What surprised you most?” Swofford responded, “Probably the overall cost number, and then if you look at the regulatory cost per member. For us, it ended up being about $3.6 million. Look at what we could have done for our members or what we could have done to supplement capital with even half that amount of money.”
Swofford also shared how the credit union has changed its staffing and job duties. “We have more people dedicated to compliance,” he said, adding that Alabama CU has 2 1/2 positions that deal solely with the Bank Secrecy Act.
“On the front lines we had to ramp up our training because now our new account folks have to be somewhat like a private investigator,” he said.
“It’s in our best interest to keep as many [credit unions] as possible out there,” Swofford said, “But inevitably with margins where they are, and if this cascade of regulations continues, I don't see how a small to medium credit union is going to handle it. It's just getting ridiculous.”