Regulatory Reform, Bank Secrety Act Lead Agenda

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Though NCUA JoAnn Johnson kicked off her remarks with defense of the agency's refusal to approve the membership votes of two Texas credit unions seeking to convert to banks (CU Journal July 25), she also took the opportunity to address a number of other key regulatory and compliance topics, including regulatory reform and Bank Secrecy Act compliance.

Credit unions must work hard to lobby Congress for regulatory reform, Johnson urged, because, "if you miss this window, you'll have to wait five years for another opportunity."

But NCUA is trying to do as much as it can to provide regulatory relief within the existing statutory framework, she noted.

For example, the agency is looking to lower the "well-capitalized" requirement for credit unions to be eligible for the agency's Regulatory Flexibility program from 9% down to 7%. The Reg Flex program is a streamlined examination process created to unfetter well-run credit unions from more intensive examinations.

"I have always said that I am all about reducing regulations, but it seems like we're kicking out new regs all the time," Johnson noted, explaining that many of the new regulations she has overseen have been "clean-ups" of existing rules, not the promulgation of brand new regs.

Johnson said credit unions frequently ask her to define the role of the agency's guidance letters. "If these are just supposed to be guidance, then why do examiners treat them as regulation," is a most common question the NCUA chair fields, she said.

But the guidance letters serve a dual purpose: they help the agency gather data Congress has asked NCUA for, and they help avoid the need to write new regulations or legislation. In essence, it's a form of voluntary compliance designed to obviate the need the promulgation of new rules, she explained.

Another key issue facing credit unions is how to comply with the myriad requirements of the Bank Secrecy Act, Johnson observed. She said she recognized BSA represents a hefty compliance burden for credit unions, but warned, "we cannot turn our heads and let it go."

Johnson also touched on the need for financial education and said she applauds credit unions' efforts in this area. But she said there was a way for every single person in the room to make an even bigger difference and take it one step further.

"When you go home, take a family member aside and teach them," she encouraged the audience. "Not only will you get the satisfaction of having made a difference, but it will make it real for you just how important this is."

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