'I Do Not Believe It Will Help'
TUSCALOOSA, Ala.-Tommy Cobb sees NCUA's Regulatory Modernization Initiative pushing the problem of CU regulatory burden "farther back in the rearview mirror."
"I do not believe it will help," said the CEO of the $50-million Tuscaloosa FCU. "Until the NCUA board has some sort of counterbalance to the motto of 'protecting credit unions and the consumers who own them through effective regulation,' and begins to trust the credit unions that build the credit union system and are rebuilding the insurance fund, they will continue the shift from member preservation to self preservation."
Cobb asserted that the NCUA board consists of "well-intending folks who are commissioned with stewardship of the CU industry for a few short years. They mean well, but a few years down the road they will be on speaking tours while managers, the true stewards, are still on the front lines serving members."
Details Are Needed
IOWA CITY, Iowa--On the surface, steps to strengthen regulations that protect credit unions sound logical, but NCUA's Regulatory Modernization Initiative may have come a bit late and could be counter-productive.
That is the way Jeff Disterhoft, CEO of the $1.3-billion University of Iowa Community CU, sees things. "My sense is that most credit unions are beginning to rebound quite nicely, so any substantive additional regulation could be counter-productive. For example, in the wake of events over the past four years I'd be surprised if there were that many credit unions that hadn't already fine-tuned their interest rate risk management."
NCUA's initiative has merit, acknowledged Disterhoft, who said additional oversight of loan participations may be in order and any steps in supporting legislative efforts to lift restrictions on member business lending and supplemental capital for credit unions is helpful for the industry. "Allowing credit unions to count subordinated debt toward risk-based net worth sounds intriguing, but without knowing some of the details, it's hard to ascertain its value to the industry at this point."
NCUA: Heal Thyself
CHATSWORTH, Calif.-Dale Verderano got straight to the point when assessing NCUA's Regulatory Modernization Initiative: "We do not need more regulations."
"It appears that President Obama's recent Executive Order 13579 on Regulations and Independent Agencies has given a green light for the NCUA to examine regulations," said the CEO of the $128-million Matadors Community CU. "You know what this means: more regulations."
Practically all agencies under the Obama administration are tightening regulations, noted Verderano. "New and revised regulations governing financial institutions are placing a chokehold on the ability of financial institutions to help speed up the economic recovery. Any new or revised NCUA regulation that requires a credit union to increase the cost of operations will not be good for the membership or the economy."
Verderano pointed out that CUs have been hit hard because of the corporate system and natural person credit union failures. "In many cases, the NCUA could have prevented further erosion of the failing credit unions by examiners taking action on existing regulations."
The CEO would prefer that the CU agency spend less time creating new rules and more time improving examiners' skills.
"I just read where the manager of the New London Security FCU had stolen almost all of the credit union's $12.7 million in investments and hid the theft from NCUA examiners for 20 years. We do not need more regulations; what we need is a regulatory agency that holds itself and its examiners accountable to already established regulations. I am anxious to see what kind of regulatory relief they are considering."
'Rearview Mirror'
TALLAHASSEE, Fla.-Count Cecilia Homison as another CEO who believes NCUA's Regulatory Modernization Initiative is a look-back approach.
"It is a rearview mirror approach, focusing on things we already dealt with and not looking at where the industry is being reshaped and truly at where new risks are emerging," said the CEO of $340-million Florida Commerce CU. "I am afraid we are falling into the trap of controlling risk based on where we have been instead of looking down the road toward where we are going."
Homison urged NCUA to take a step back and take a breath, instead of trying to "regulate, regulate, regulate. Let's see what happens in the industry with the regulations that have already been enforced. Credit unions are really looking further into their operations and into what the risk profiles are. Let the industry respond instead of feeling like you have to put another piece of regulation on it."
Will Word At Top Reach The Bottom?
GADSDEN, Ala.-Ron Summerall supports NCUA's new regulatory initiative, but is concerned that what will eventually be handed down from the top, may not be executed correctly by the entire team in the field.
"Conceptually it is an area NCUA needs to look into," said the CEO of the $210-million Alabama Teachers CU. "NCUA has a tremendous burden now-they have to have a better handle on credit unions than at any time in the past. But my concerns are with the direction being filtered down to credit unions in a way that accomplishes what needs to be accomplished from a safety and soundness standpoint without giving credit unions undue additional concerns and requirements."
Summerall suggested, as have many credit unions in recent years, that the examination team is not always in sync with the leadership of NCUA. "There is often a lot of variation between what was stated and what actually gets implemented."
