WASHINGTON – Credit union executives and directors were broadly dubious of an NCUA initiative Chairman Debbie Matz says is de-regulatory in its aims.
“If she was talking about de-regulation, why in the world did she rescind reg-flex?” said David Wright, president of Services Center FCU, after Matz discussed her initiative during NAFCU’s annual Congressional Caucus.
Wright and other credit union figures were questioning the substance of the proposal, which appears to be a hodgepodge of initiatives already in progress. It included a project in the works the past year to allow more credit unions to use financial derivatives, and continuing NCUA’s lobbying of Congress to lift the regulatory cap on member business loans. It included allowing all credit unions to participate in the agency’s reg-flex, or regulatory flexibility program.
But it also included several proposals that will add significantly to the regulatory burden on credit unions, including a rule that will add regulations on loan participations, an ongoing effort to regulate CUSOs and another on interest rate risk management.
NAFCU attendees questioned whether the initiative amounts to regulatory relief, as Matz and NCUA purported. “I was unimpressed,” said William O’Brien, president of Suffolk FCU, Medford, N.Y., who said he heard “no specifics” that were de-regulatory in nature. “But the fact that they’re taking that approach is hopeful [because] the last couple of years it really hasn’t been that way.”
“There wasn’t a lot of change from what we’ve seen in the past,” said Mark Hudzik, chief development officer at Member One FCU, Roanoke, Va.
“What they’ve done is contrary to what she’s saying,” said Robert Holmes, a longtime director at Chartway FCU, Virginia Beach. “The only thing that can be verifiable is what happens from now on.”
“The whole thing with the corporates made them lean on everybody – the horse is out of the barn,” said Holmes. “So they’re coming down on everybody.”
“I don’t see them (extending) reg-flex, a year after they made those cutbacks [to the program],” said Chris Craighead, president of Centric FCU, West Monroe, La.
The remarks came the day after Matz told the 400 attendees of the NAFCU conference she is following the spirit of President Obama’s recent directive for federal agencies to review regulations for potential of elimination or modernizing, which her staff billed as an effort at de-regulation.
“In cases where regulations are ineffective or overly burdensome, they should be eliminated or streamlined,” said Matz. “I also believe where new risks have arisen and current regulations are outdated or insufficient, those regulations need to be modernized.” She promised regulatory relief by “stripping away regulations that limit flexibility and growth, without jeopardizing safety and soundness.”
But the speech, which comes after an unprecedented two-year period of re-regulation at NCUA after the 2008-2009 financial meltdown in banking, raised broad skepticism, especially as Matz was discussing several initiatives that will increase regulations on CUSOs, loan participations, investments and management of interest rate risk, among others.
“NCUA talks out of both sides of its mouth,” said Services Center FCU’s Wright, who criticized last year’s rollback in reg-flex, the seven-year-old NCUA program that rewards healthy credit unions with less oversight.
“We’re trying to play by the rules, but the rules are constantly changing,” lamented David Gleason, a longtime director with Empower FCU in Syracuse, N.Y. “Just tell us what the rules are so we know. Let’s maintain some consistency. We feel that we know what we’re doing and we feel like we’re doing a pretty good job protecting our assets.”
