Legislation and regulation
Three top challenges on the legislative and regulatory fronts are the deficit, tax reform, and regulatory relief, say CUNA’s Ryan Donovan, senior vice president, legislative affairs, and Mary Dunn, senior vice president, regulatory advocacy, and deputy general counsel.
“Anytime Congress has to
Credit unions have seen unusually strong membership growth during the past year, likely due to the effects of Bank Transfer Day and related events.
Specifically, U.S. credit unions added approximately
2.2 million net new memberships during the 12 months ended June 2012, according to NCUA Call Report data—the fastest increase in more than a decade.
This growth rate is 80% higher than the 1.2 million average addition in similar 12-month periods during the past decade, CUNA reports. It’s four times greater than the 550,000 addition in the year ended June 2011.
Membership growth in the year ended June 2012 was 2.2%—the greatest percentage membership increase since June 2000 to June 2001, when the movement experienced a 2.6% increase.
And don’t expect credit unions’ continuing compliance burden to go away in 2013, Dunn adds. The broad mandate Congress gave the Consumer Financial Protection Bureau (CFPB) means there’s almost nothing it can’t examine more closely—adding to credit unions’ increasingly heavy regulatory burden.
“We need to find ways to get the CFPB to stick closer to the tasks assigned by Congress and for Congress to be aware of the consequences of its requirements,” Dunn says.
Fortunately, she believes CFPB Director Richard Cordray sincerely appreciates the value credit unions provide. “Congress has given him a set of marching orders that he’s obligated to meet, but I believe he’s trying to minimize the burden on credit unions, and we need to leverage that as much as we can.”
Donovan believes the regulatory pendulum is starting to swing back the other way, especially for smaller financial institutions. “Congress is aware that if regulation is too stringent, credit and services will be choked off.”
The best ways to make progress on the legislative/regulatory front, the experts say, are to:
►Hike the hill. Ongoing, directed advocacy from CUNA, leagues, and credit unions is absolutely critical. “We must continue to be proactive in the regulatory and legislative arenas,” Dunn says.
►Push to maintain an independent secondary mortgage market. “A lot of folks in Congress want Fannie Mae and Freddie Mac to go away,” Donovan says. “But if they do, credit unions may be forced to deal with the four or five largest banks. There has to be an orderly transition and a secondary market that isn’t entirely reliant on these banks.”
►Become better informed about the national supervisory manual, which is designed to bring consistency to credit union examinations. There’s an increasing level of concern in Congress about how financial regulators are handling examinations, Dunn says, and this has had a ripple effect.
“NCUA has specifically pointed out the value of the national supervisory manual and this gives credit unions an important resource,” she says. “If an examiner’s findings aren’t consistent with the manual, the credit union now has a way to hold the examiner accountable.
“In the past few years,” Dunn continues, “there has been a sense that Congress wanted regulators to head off problems to the point where the exams were often harsher than necessary.”
►Spread the word about credit unions’ financial literacy efforts. This is a chance for credit unions to shine, Gregoire says. “We live this every day and should use it to differentiate ourselves.”
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