Bill Hampel, CUNA
WASHINGTON–CUNA hosted a webinar for its affiliated credit unions on updated numbers being released as part of its extensive examination of the cost of regulation to CUs, as well as to offer an update on the bylaws changes it intends to put forward for a vote.
CUNA’s chief operating officer and chief of staff, Rich Meade, said CUNA’s plan moving forward is to offer similar webinars to keep affiliates up to date. The two topics chosen for this webinar, Meade said, were those that are currently most “front and center.”
As CUToday.info reported here, earlier this year CUNA hired Scottsdale, Ariz.-based Cornerstone Advisors to conduct a deep dive analysis of the cost of regulations to credit unions. Fifty-three credit unions participated in that broad data collection effort, with Cornerstone and CUNA arriving at a reg burden cost figure of more than $6 billion annually to credit unions.
During the webinar CUNA offered some updated figures and additional details on how the numbers break down. Among the new data points was a $2.8-billion increase in regulatory costs to credit unions since 2010, primarily as the result of changes brought about by Dodd-Frank and Durbin.
Net Income 'Stuck'
“The increase turns out to be about 24 basis points of assets,” said Bill Hampel, CUNA’s chief economist and chief policy officer.
That number is important, he said, because credit union net income has been “stuck” around 80 points for several years after traditionally being around 100 basis points. “The question has been how to get back to 100 basis points,” noted Hampel. “Here’s the 20 basis points.”
To arrive at the 2010 number, CUNA, Cornerstone and the participating CUs used the same methodology as was used to arrive at the 2014 figure.
The updated numbers also factor in about $1.1 billion in lost revenue, bringing to $7.2 billion the estimate for total financial impact from regulation, according to CUNA and Cornerstone. Hampel said the $1.1 billion is actually “understated,” and takes into account only the reduced interchange fees from the Durbin rules. While Durbin doesn’t apply to most CUs, it has driven down interchange, and CUNA arrived at its estimate based on the number of transactions generating interchange that took place in 2014.
What has been left out of that estimate is the reduced lending volume resulting from new rules that have gone into effect since 2010, including Dodd-Frank again as well as Qualified Mortgage rules. “Those rules have made it much more difficult to quality and have discouraged people from applying because they have heard they can’t qualify,” said Hampel. “But you can’t measure how many people haven’t applied as a result.”
CUNA said it left even an estimate of such lost lending out of its analysis of the cost of regulatory burden so that the report is taken more seriously on Capitol Hill.
No 'Cooked' Books
“We know that policy makers will say, ‘You cooked the books’,” observed Hampel. “But these numbers are conservative and as solid as we could make them.”
Added Meade, who used to work in a staff position on Capitol Hill with CUNA CEO Jim Nussle when he was in Congress: “I have been on the receiving end of those kinds of reports, and they are not very helpful. To have something that has not been cooked is helpful.”
Hampel said the appendix that will be part of the finished report will explain how the figures were compiled and make clear that estimates of many costs were left out of the report to add legitimacy to the figures.
During the second half of the webinar Meade led a presentation on the changes being proposed to CUNA’s bylaws, which primarily focus on the much-debated issue of “choice” to allow a credit union the option of belonging to a state league, to CUNA, or to the traditional model of both.
“There were not many questions (from credit unions) at all on the bylaws, so, hopefully, that is a good sign,” said Meade. What questions there were focused on league dues and whether the dues waiver process will remain in place (it will).
CUNA’s plan is to get additional information in front of credit unions about the bylaws and to hold a vote during its Governmental Affairs Conference (GAC), scheduled for February in Washington. At least one breakout session on the bylaws will be held during GAC.
More Info At GAC
“We’re excited about the opportunity to talk to credit unions directly about the bylaws changes,” said Meade.
Similarly, presentations are also planned for GAC on the data from the Cornerstone study on the cost of regulations to credit unions, including a general session address and a breakout session. Hampel said CUNA is working to break out data by state so credit unions can localize the national numbers during their meetings with representatives.
“We want to have the national data numbers, but also stories with concrete examples,” said Hampel. “We want to provide both quantitative and qualitative data.”