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As we head into fall, the list of pending regulatory concerns for credit unions is long, but the Credit Union National Association (CUNA) is taking steps to contain the burdens associated with new directives and rules.
At the top of the list are supervisory issues. Credit unions nationwide say they’re having problems with examiners being too aggressive and demanding actions, without being able or willing to provide the legal authority for those directives.
That’s why back in July, CUNA Chair Harriet May and CUNA President/CEO Bill Cheney established the Supervisory Issues Working Group. The group, chaired by Ohio Credit Union League CEO Paul Mercer, developed an important tool: the Examination Experience Reporting Form.
The form allows credit unions to report to CUNA and their leagues any problems they’ve encountered during an exam or in other dealings with regulators. Respondents’ identities are held in strict confidence. Both aggregate and summary information from the forms are used to document problems to the regulators.
CUNA will continue to press regulators to direct examiners to deal with problems correctly.
Of course, the implementation of the various provisions in the Dodd-Frank Act that affect credit unions also is a key focus of CUNA’s regulatory work—and has been since its enactment in July.
Because 70% of credit unions offer debit card programs to their members, and interchange income is substantial for most of them, the regulation of the interchange provisions in the act continues to be a high priority. Regrettably, it’s unlikely that all of the income credit unions now receive from debit interchange fees will be preserved. In an effort to save as much as possible, CUNA representatives have been meeting with Federal Reserve Board staff writing the interchange rules.
Primarily, we want to ensure that the credit union exemption (for credit unions with less than $10 billion in assets).
We also continue to urge the Fed to enable a two-tier system that will accommodate higher fees for credit unions under the exemption than the fees allowed for large issuers. The proposal from the Fed is expected in December and the final rule in April 2011.
Another major issue is the establishment of the new Consumer Financial Protection Bureau, which the Treasury Department is overseeing. Cheney and I recently met with Assistant Secretary for Financial Institutions Michael Barr. He told us the bureau will focus first on regulating businesses in the financial marketplace that have abused consumers and haven’t been regulated until now.
Even so, CUNA’s losing no time in identifying issues and concerns the new bureau may pose for credit unions. That’s because the new bureau will have tremendous powers to regulate consumer financial issues, including 18 laws that are now regulated by the Fed and others. The laws include the Truth in Lending Act, the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, and others.
The new agency also may regulate unfair and deceptive acts or practices, generally, which is very open-ended. More important, the agency may exempt from its rules any covered entities, services, or products. We’ll be looking for every opportunity to pursue exemptions for credit unions.
The Dodd-Frank Act also contains a range of new requirements for home mortgage lending. The Fed already is developing new appraisal rules, expected to be proposed this month. We’re working closely with the Fed and Treasury on the implementation of these provisions.
CUNA is very concerned about credit unions’ present regulatory burden and the growing requirements as a result of Dodd-Frank, National Credit Union Administration initiatives, Fed rules, and Financial Accounting Standards Board proposals. We’ll continue to press all credit union regulators to do more to contain regulatory burdens for credit unions.