BIRMINGHAM, Ala.-Picture a world where a credit union needs to get permission from NCUA to buy a copier.
That's just one of the very real potential consequences of NCUA's proposal to rein in Reg Flex, according to Dennis Dollar, the CU consultant who penned the original Reg Flex program when he was NCUA chairman in 2002.
"If they take away the exemption on the fixed-assets rule, you're going to have credit unions that can't even buy a copier or computer terminals-much less build a branch-without a waiver from NCUA," Dollar related. "That puts a huge burden not only on the credit union but on the agency, as well."
Another concern: what happens if all those Reg Flex credit unions have to go back to requiring personal guarantees on member business loans?
"Now you have credit unions that are going to have to restructure their entire loan portfolio, policies and process," Dollar observed, noting that in addition to the burden of all of that restructuring, it also puts credit unions at a serious competitive disadvantage at a time when the White House has been encouraging financial institutions to make loans to small businesses to help prop up the economy.
"Again, I understand why they are looking more closely at business loans-we've all heard that business lending is going to be the next shoe to fall," Dollar offered. "I just don't think this is the way to fix it."
If NCUA moves ahead with its proposal to trim back Reg Flex, "credit unions will change their branching plans, they will change their lending policies-and that may well be the right thing to do for a credit union in trouble, but that's not every credit union," Dollar said.
