By Michael Fryzel
The major focus of achieving regulatory relief and a change in the way financial regulators conduct what they do has been on the Financial CHOICE Act (CHOICE) and a possible return to Glass-Steagall type legislation. However, the real key to achieving any beneficial change for credit unions lies within the walls of the National Credit Union Administration (NCUA).
The hopes and dreams of credit unions and their trade associations for relief from years of dealing with excessive regulation and compliance requirements should not be placed solely in the hands of Congress. They cannot rely on the actions of Congress to achieve what is needed.
CHOICE is a lengthy piece of legislation that seeks to provide relief for all types of financial institutions and small businesses. Although containing provisions heralded by credit union advocates, its movement through the House of Representatives is the result of the Republican majority supporting it. Democrats on the House Financial Services Committee oppose the legislation in its current form and have called for more hearings to level additional criticisms and concerns. Although likely to secure passage in the full House, it heads to the Senate for a fierce battle by Democrats who have already claimed it is DOA. In addition, there are some Republican Senators who want to draft their own regulatory relief bill.
Not having the House and Senate GOP united on one piece of legislation could signal that if something does get passed it will not contain all of the changes everyone anticipated. Any improvements made to make the Consumer Financial Protection Bureau a more acceptable agency to all members of Congress and the businesses it impacts, may be far less than hoped for.
There is an Alternative
For credit unions, the continued bickering in Congress could lead to nothing of significance being accomplished which will mean just another year of frustration. Promises of a better business environment will again be broken.
But wait, there is an alternative. There is a light at the end of the tunnel. There is hope amidst of the despair. There is a way to accomplish much of what credit unions need to better serve their members in a pro-consumer, pro-business environment. NCUA has the ability, authority and means to make changes for the better and enable credit unions to move forward regardless of what Congress may or may not do.
The first step has already been taken by the agency in the passage of new member business lending regulations resoundingly held by the courts to be well within the confines of the law rejecting the argument of the Independent Community Bankers Association to the contrary.
Step two was the changes to the field of membership regulation that will allow even more individuals to become part of a cooperative financial network dedicated to meeting the needs of those who join. Again challenged, this time by the American Bankers Association, the rule allowing greater access to financial services by the general public is sure to gain the court’s approval.
Step three, currently in progress, will enable credit unions to raise and use alternative capital to grow and improve.
Other Steps To Take
To those three significant steps, NCUA should add the following which they clearly are authorized to do:
* A review of all regulations enacted since 2008 that impair the operation of credit unions and could be lessened or repealed.
* A reorganization of regions with consideration given to consolidation and a reduction in number.
* Across the board budget reductions resulting from staff realignment and personnel reduction.
* Implementation of a new appeals process.
* Completion of the concept to consolidate the Corporate Stabilization Fund and the Share Insurance Fund with a realistic timetable and disclosure of the step by step process to be followed.
* A complete review of policies and procedures with the goal of updating and improving the day to day operation of the agency.
These represent six more steps to a list that could contain even more. Each step representing a major agency accomplishment.
The future growth and success of credit unions does not lie in the hands of the 535 individuals in Congress but rather in the hands of just three, the two current and one future member of the NCUA board.
Michael Fryzel is the former chairman of NCUA and NCUA board member who is now in private practice in Chicago. Mr. Fryzel can be reached at meflaw@aol.com.