Credit Union Execs Discuss Regulatory Burden at House Subcommittee Hearing

May 16, 2012 - The House Subcommittee on Financial Services and Consumer Credit held a hearing on May 9 to examine the impact of regulatory compliance on small financial institutions.

The panel of credit union and bank executives communicated to the Subcommittee that compliance costs both in terms of staff and operations has grown significantly over the last several years, especially from regulations promulgated in response to the economic crisis such as the Dodd-Frank Act. 

While exemptions for smaller institutions were well-intentioned in Dodd-Frank, many areas impact institutions of all sizes. For example, the various consumer compliance disclosures related to mortgages or the remittance regulations recently issued from the Consumer Financial Protection Bureau (CFPB).  

Subcommittee members inquired whether their prudential regulators have responded to regulatory burden concerns. Terry West, president and CEO of VyStar CU (Jacksonville, Fla.) commented that regulations are "always increasing, never decreasing." The panelists also commented that the lack of a "roadmap" of upcoming regulations makes it difficult to plan for staff or budget considerations related to compliance. 

The group also commented on the consolidation of smaller institutions due to increasing compliance obligations and that the trend is likely to continue given, for example, that regulations are still outstanding from the Dodd-Frank Act.  The panel suggested, among other items, consideration of legislation to limit ATM disclosure requirements (H.R. 4367), the elimination of annual privacy notices (as contained in H.R. 1697) and reforms in H.R. 3461, the Examination Fairness Act.  

West testified on behalf of CUNA; he is also a director of NASCUS' Credit Union Advisory Council. Other witnesses included William Grant, Chairman, President and Chief Executive Officer, First United Bank & Trust;  Ed Templeton, President and Chief Executive Officer, SRP Federal Credit Union (on behalf of NAFCU); Samuel Vallandingham, Vice President and Chief Information Officer, First State Bank; Adam Levitin, Professor of Law, Georgetown University Law Center; and Mike Calhoun, President, Center of Responsible Lending.