Whether it's the expansive powers of the Consumer Financial Protection Bureau or NCUA's rule-setting and examination practices, regulation is top of mind with CU execs this time of year.
Credit Union Journal spoke with several credit union leaders and asked them what they will talk about when they "Hike the Hill" during CUNA's governmental affairs conference this week. (And if they're not in Washington, what they hope their colleagues will emphasize.) Regulation was at the top of most lists.
1. NCUA Exams
Mike Dillon, marketing director at the $51 million South Division CU, Evergreen Park, Ill., says it's time Congress tells NCUA that the regulator needs to be more consistent with CU examinations.
"We don't know what to expect from our examiners," said Dillon. "We need more consistency from them in the entire plan for our exam as well as the outcomes. Examiners, in my opinion, have to be better connected with the main office in Alexandria."
2. Remove The Handcuffs
As far as David Bojarczuk is concerned, the top priority should be loosening member business lending and field of membership restrictions on credit unions.
"It's difficult enough with the rules we operate under to compete with banks," said the senior vice president and director of corporate finance at the $410 million GFA FCU in Gardner, Mass. "Credit unions compete with all other financial institutions in this country and we do it under tighter standards. Plus, if the proposed risk-based capital rule goes into effect as it is currently written, our capital standards will be tighter than banks. It's time to loosen the handcuffs."
3. Rule Has Pitfalls
The "pitfalls" of the proposed new capital rule should be clearly explained to lawmakers, urged Louis Jimenez, CEO at the $157 million Montauk CU in New York.
"There are many negative effects this blanket proposal will have on a host of credit unions in New York City, and across the country."
Jimenez is concerned about how the rule risk weights MBL and the negative effect it will have on the risk-based capital ratio for many credit unions that offer taxi medallion loans.
A number of CUs that offer Taxi medallion loans, as well as some that are faith based or serve agricultural communities, have no MBL cap, grandfathered in when the MBL cap was established in the late '90s. (See related story on page 1.)
"This could hurt the ability to lend for many credit unions which, with a great deal of pride, serve their members who really need these loans to get by."
4. CFPB Needs Oversight
There is a growing contingent of CU execs who have more concerns with the CFPB than the NCUA. The reason, explains David Proffitt, is the expansive powers of the consumer agency.
"Congress needs to keep pressure on the CFPB," said the CEO of the $184 million Alcoa Tenn FCU, Alcoa, Tenn. "Someone has to. They need some sort of rotating board to answer to, and should not be some monolithic, unaccountable regulatory agency. They are right there with the IRS."
5. Small CUs Struggling With Compliance
The compliance burden facing small credit unions is an issue Helen Godfrey-Smith hopes many CUs champion when they Hike the Hill Wednesday.
The CEO of the $101 million Shreveport FCU in Shreveport, La., sees small credit unions bringing only a small risk to the Share Insurance Fund and therefore should receive some reprieve from mounting regulations that are making it very difficult for small shops to survive.
"The $10 to $20 million-asset credit union is competing with big banks but the growing regulatory burden is making it difficult for them to provide even basic services," she said. "They need some relief."
