Credit unions and other small financial depository institutions are finding it nearly impossible to navigate the chaos created by the continued barrage of compliance challenges.
Lack of coordination among the regulating agencies, redundancies in rule-making and the absence of any cost-benefit analysis for the regulatory efficacy of the many and varied rules have only served to escalate the financial burden placed on these institutions instead of benefiting consumers and the economy.
The impact is very pronounced on credit unions. As Ed Templeton, the president and CEO of the $600 million-asset SRP Federal Credit Union, noted in his recent testimony before the House Subcommittee on Financial Institutions and Consumer Credit, "JPMorgan Chase has 3,000 employees dedicated to compliance. SRP has two." Yet, SRP must comply with the same laws and regulations.
Dodd-Frank created a host of new regulatory obligations (approximately 400 new rules) that the National Credit Union Administration, the banking regulators and other financial regulatory agencies are expected to promulgate. And, there is little, if any, coordination between any of these agencies as they move forward with their individual rulemaking.
I recently sent a letter to Treasury Secretary Timothy Geithner, in his capacity as chairman of the Financial Stability Oversight Council, to urge that he take immediate action to facilitate regulatory coordination among the agencies that oversee financial depository institutions.
While my trade group supports the existing regulatory infrastructure and NCUA as an independent regulator, the FSOC has an obligation under Dodd-Frank to facilitate regulatory coordination. When smaller financial institutions, such as credit unions, are inundated with regulations from multiple agencies simultaneously, their ability to meet the needs of their members is severely hampered and their services are unduly curtailed. The ultimate impact is that many of them are essentially being forced to "give up" and merge with another institution.
Without a coordinated approach to financial regulation, credit unions cannot continue to fulfill their mission of serving their members and strengthening our nation’s economy. Ultimately, every dollar spent on compliance is a dollar not available for lending, further styming reliable sources of financial advancement for millions of America’s consumers.
Fred R. Becker, Jr. is the president and CEO of the National Association of Federal Credit Unions.
