How would you ease the credit union compliance burden?
August 21, 2018 7:54 AM
Let's play "Choose Your Own Reg Relief!"
Congress recently granted credit unions long-awaited regulatory relief, but many in the movement say there is a long way to go before they will be completely satisfied with the current compliance regime. At the recent CU Leadership Convention in Las Vegas, Credit Union Journal asked attendees to name the one regulation they would delete, modify or add if they had the power to change anything. Read on for a slate of interesting ideas.
Stephen Nakanishi, director, $10 million-asset OTS Employees FCU, Honolulu
Reg E regulates the number of cash transactions per month. Some of our members use the credit union as a budgeting tool. They come in and take out $10 per day, so sometimes that is a problem. Overall, I would say most regulations should stay intact, but regulators need to look at what will apply to millennials 10 years from now.
Scott Arkills, CEO, $781 million-asset Silver State Schools CU, Las Vegas
We continue to fight with a ruling relating to the Fair Credit Reporting Act. The Federal Trade Commission’s guidance was formally rescinded and transferred to the Consumer Financial Protection Bureau. It has become similar to the ADA website issue in there is no clear ruling from the federal government and leaves a window open for lawsuits. There is a local law firm that handles bankruptcy, then goes back and checks to see if all the credit reporting is “exactly” correct. Rather than just advising the bankruptcy client to dispute the credit report filing to correct it, they contact the credit union’s member and tell them that they should sue the credit union for damages, and oh by the way also get the reporting corrected. This law firm has sued Nevada credit unions up to $50,000 per client for supposed damages, while also disputing the filing. We have challenged each FCRA case and have been willing to fight the frivolous claims when we know that we have reported correctly. When we reached out to the FTC, they said they were aware of the problem and they empathized with our situation, but they would have to forward it to the CFPB as it no longer falls within their jurisdiction. The CFPB has not responded to credit unions on this matter that we have heard.
Shaukat Jaffer, CEO, $130 million-asset Nizari Progressive FCU, Sugar Land, Texas
I would change the pre-payment regulation put in place by NCUA. If a member prepays a business loans within one year there is no penalty, which does not allow a credit union to recover all the costs that went into getting and booking the loan.
Eric Houma, board member, $510 million-asset Gather FCU, Lihue, Hawaii
I try to maintain the mindset that regulations are there for a purpose. As cumbersome as many of them are, they are meaningful. I do not know if there is any particular regulation I would change, but overall there should be some simplification. Credit unions are being forced to hire people just to handle compliance, and that is hard on smaller credit unions. Maybe there could be more latitude on reporting.
Fred Dalit, CEO, $20 million-asset Honea FCU, Fort Shafter, Hawaii
Because we are such a small credit union, we do not have time to follow legislation as closely as we should. There are so many regulations out there, it would be good for us if any one thing was eliminated, and thereby ease our burden.
Gloria McClendon, CEO, $7 million-asset Greater Cleveland Community CU, Cleveland, Ohio
I would restructure the Dodd-Frank Act because it has restricted a lot of things we used to do. One of the biggest issues relates to credit cards. If a member has issues, we should be able to look at their history and make a decision.
Cathy Ellis, CEO, $67 million-asset Meijer CU, Grand Rapids, Mich.
I would change internal audit. I understand the value of controls, and I recognize what they are trying to accomplish, but we struggle with the costs associated with managing all risks in the environment. We would like to find the right balance of risk management with making a reasonable profit.
