ARLINGTON, Va.—CUNA is guardedly optimistic that credit unions' regulatory load will lighten in 2014, while NAFCU feels it will be another busy year.
But both credit union trade associations agree that capital reform is one of the biggest regulatory issues the movement will address in 2014.
NCUA Chairman Debbie Matz has stated that proposed new risk-based capital rules are expected to be out for comment in the first quarter of the new year.
"NAFCU supports a risk-based capital system that needs to be accomplished via legislation," said Carrie Hunt, SVP of government affairs and general counsel at NAFCU. "We also support NCUA making sure they are looking at risk on the examination side, and not just creating new capital rules to create new capital rules."
Hunt pointed to the fact that most credit union failures in recent years have come from institutions below $50 million in assets. "And (it appears) that the new capital rules won't even impact these credit unions."
Matz recently told Credit Union Journal that a CU's capital requirement will be individually weighted, determined by the amount of risk on the credit union's books, and that the agency expects the guidelines will only affect about 200 credit unions.
Hunt said NAFCU is concerned the new capital requirements are arriving at a time when CU capital continues to climb, coming out of the recession.
"We have not seen the justification [for new capital rules]. In fact, credit union capital ratings continue to improve. NCUA will have to prove their case. If there is additional risk out there for credit unions, I am not sure capital is the right answer."
Aside from CUs dealing with proposed new capital rules, Mary Dunn, CUNA SVP of regulatory affairs and deputy general counsel, hopes that with the majority of Dodd-Frank rulemaking behind, the pace of new requirements coming at credit unions will lessen.
"I am not the regulator, so I cannot say what is coming and what is not. But at this moment in time there appears to be some light at the end of the (compliance burden) tunnel," she said.
While Dunn does not foresee wave after wave of big-ticket regs like the ones that rolled in in 2013, she said there will be enough, both in number and in scope, for CUs to be on their toes this year.
Dunn pointed out credit unions will be dealing with the new remittance rules that took effect in October and certainly the new mortgage requirements that begin in January.
"Stress testing comments are due to NCUA at the end of December and we will see more on that in 2014. Rules on derivatives are still pending and we hope that issue will be resolved early in 2014."
Dunn turned to the Financial Accounting Standards Board, saying the organization may call for additional reporting on credit losses that could force CUs to fund allowance accounts at higher levels.
"On the positive side, FASB is looking at whether or not non-publicly traded institutions, like credit unions, ought to get somewhat of a break, having some flexibility in complying with accounting provisions but still being under GAAP," Dunn said.
Looking at NCUA's annual regulatory agenda, Hunt sees the agency possibly changing some CU investment rules it has been mulling for a while. "We have also not seen the final rule on incentive-based compensation, but we expect movement on that soon."
NCUA has stated that cyber security will be a priority in 2014, which NAFCU supports. Hunt, however, said the trade association hopes that the increasing scrutiny from all of Washington on this matter does not turn cyber security into "the next BSA, with lots of rules and regulations issued" to place another significant compliance burden on credit unions.
Both Hunt and Dunn contend that predicting the activity of the Consumer Financial Protection Bureau may be the toughest call.
"We know they are looking at the Home Mortgage Disclosure Act, payday lending, student loans, deposit account disclosure, debt collection, indirect lending," said Dunn. "There is a lot to be mindful of."
Hunt added that the CFPB is paying attention to prepaid cards and overdrafts. "It's unclear what the agency wants to do with overdrafts. Maybe try to curtail the number of them, maybe additional disclosures or make the fee proportional to the actual transaction amount."
Among all potential regulatory changes on the horizon, Dunn said she is very concerned about the impact on credit unions from the Federal Reserve's focus on payments.
"The Federal Reserve Banks just concluded a study (Federal Reserve's 2013 Payments Study) that addresses the roles of banks and the Federal Reserve in the payments system, and what is needed in terms of regulation. We are concerned the agency will impose a new layer of regulation on payments, including regulating how innovations are introduced into the marketplace to make sure consumers are protected."
