Overlapping Regs, Overlapping Agencies

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BOLOGNA, Italy-The single biggest compliance burden isn't one specific regulation but rather a general lack of clarity across the entire regulatory landscape, according to one expert.

With so many overlapping regulations and agencies and still more to come, credit unions are hard pressed to know and understand what they do and don't need to comply with, said Larry Howell, chairman of CRIF Lending Solutions. "I don't think it's going to go away and I don't think it's in our control."

The name of the game then, is adapting. "Understand that this is the new game and this is how it works," Howell said.

He related the story of meeting with a credit union years ago and attempting to sell credit reports to the CU. Howell recalled the rep saying: "'I don't need them; I look into the person's eyes and I can tell whether they're going to pay us back or not.' Can you imagine saying that to a regulator? It just doesn't work."

Beyond just the issue of clarity, he said, new regs often come at a fast and furious pace, with short deadlines attached, making it even more difficult to comply. "You need to be prepared that you're going to be audited; you need to justify what you did, the decisions you made; you need traceability, transparency," said Howell.

While analytics tools can greatly help with those tasks, Howell also suggested that many small or mid-size FIs could be priced out of those solutions. So, he said, either generic, more affordable tools will need to be created or FIs will have to band together and pool resources to afford the best customized analytics tools.

"To me, the key with small and mid-size credit unions is that you can't do things on your own; you've got to do things as a group and spread that cost," he said.

That same spirit of cooperation, he continued, will be key to navigating new regs. Credit unions, state leagues and trade associations, he said, will all have to work together to make sure everyone understands the new requirements. "It's a big risk for each organization to be taking a look and taking a different position," he said. "We need more of a uniform position."

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