Only Thing Scarier Than Reform Bill: The Regulations Still To Come

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CHICAGO-There is greater concern over what's to come-rather than what's already known-regarding the financial reform legislation signed into law by President Obama last week.

Credit union leaders told Credit Union Journal they fear already burdensome regulatory and compliance demands will become overwhelming in the next few years, and will only add new expenses at the same time interchange income is declining.

"The big impact has yet to be felt," said Debra Schwartz, CEO at the $2.1-billion Mission FCU San Diego. "Who knows what the regulatory agencies are going to come up with."

Schwartz and other CU leaders spoke with the Journal last week during NAFCU's annual meeting.

Schwartz is concerned the cost of regulatory compliance will affect Mission FCU's ability to continue to add products. "It may mean that we cannot offer mobile banking because my compliance team is geared up on another task. We can lose by what we can't, or don't have the time to offer. We have limited resources like everyone else. We have a project prioritization team that decides what projects get done and when. Now regulatory has to go on top of the list, which means other things get pushed down."

Schwartz also expects the credit union will have to hire an additional person to oversee lending compliance.

Janet Cowell, CEO of Parsons FCU in Pasadena, Calif., is most concerned about lost interchange, especially since the $220-million CU does not rely on fee income. The CEO, too, worries about what's more to come from the regulatory agencies and the time the credit union will have to invest. Cowell said the extra time dedicated to conforming with and addressing new rules will most likely be added to her own duties. "We do not have a big staff and it will take an enormous amount of time to keep track of all the new regs, write requirements, and get them approved by the board."

In Alexandria, Va., Jan Roche, CEO of the $1.2-billion State Department FCU, is bracing for a significant loss in interchange revenue, but beyond that will not spend a great deal of time worrying about additional regulatory changes likely tocom. "Bring it on," Roche said. "We will deal with reform as it comes. And with NCUA in our field of membership we are buying into some of what they are saying-they have a seat on the table and will represent credit unions in this."

Jeremey Kahl, CFO and COO of Communities for the $111-million Abilene FCU in Abilene, Texas, will be paying a lot of attention to the new regulatory body NCUA will be part of. "They will get to dictate new regulations and they are a huge unknown. How much authority will they have and will they be allowed to run away with things?"

According to Richard Webb, CEO of the $83-million Atlantic Financial FCU in Hunt Valley, Md., the 2,400-page financial reform bill itself may not yield a lot of promise. "I know parts of it. I don't know the entire bill. And I don't know if Congress knows the entire bill. I am familiar with the parts on the new Consumer Protection bureau and I think that is a waste. We already have so many regulatory agencies doing the exact same thing."

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