By Carrie Hunt
Top among NAFCU’s recommendations to the National Credit Union Administration on its Annual Regulatory Review was a call for NCUA to more effectively collaborate with other regulators, particularly during the rulemaking process, on regulations that have the potential to impact credit unions.
There are three major ways to determine policy: the legislative branch via Congress, the executive branch via agency rulemaking and the judicial branch via the courts. Of the three options, rulemaking is usually the best option: Congress takes forever to act and litigation is very limited, expensive and success is always uncertain. However, in the last year, there have been rulemakings promulgated by the Consumer Financial Protection Bureau (CFPB), Department of Defense (DoD), and Financial Accounting Standards Board (FASB), which seem to have been developed without the unique structure of credit unions in mind.
NAFCU believes that many of these rules either directly or indirectly overstep NCUA’s purview as the prudential regulator of credit unions. To help stem the tide of redundant and unnecessary regulations being imposed on credit unions by other agencies, NAFCU has urged NCUA to prevent additional regulatory creep and challenge any unnecessary infringement of its authority by other federal regulators.
Case in point: The CFPB’s recently proposed payday lending rule would alter important provisions in NCUA’s Payday Alternative Loan (PAL) program, which was designed specifically to combat the types of loans and bad practices that the bureau is trying to eliminate. While the CFPB incorporated some regulatory language to take the PALs program into account, many parts of the rule are problematic for credit unions. NAFCU believes NCUA should actively and publicly engage the Bureau as it develops a final rule to preserve the rights of credit unions. And to take a step further, be prepared to interpret the rule for credit unions or change its own rules if necessary.
NCUA Is Independent For a Reason
Already NCUA participates in interagency negotiations and other rulemaking processes. Ideally, NCUA will always have a seat at the table and work with CFPB, FASB and other regulators to achieve reasonable and well-coordinated approaches to regulation. We believe that greater discourse will promote greater efficacy in developing new rules, create a more positive regulatory environment and allow credit unions to better serve their 103 million members.
The NCUA exists as an independent agency for a reason; credit unions need a regulator that understands and promotes the credit union difference. While NCUA already works with other regulators on a regular basis, and many times has worked to preserve the uniqueness of credit unions, NAFCU would fully support NCUA being an even stronger regulator that works with the credit union community when the industry is under fire – even when it comes from other regulatory bodies. With an average of one credit union disappearing every single day, largely due to regulatory burden, the stakes are too high.
Carrie Hunt is Executive Vice President of Government Affairs and General Counsel at NAFCU.