By Pat Keefe
August has typically been a relatively sleepy time of year in Washington. Despite the advent of air conditioning, many people (led by Congress) and the issues they follow have honored the long tradition for the eighth month of taking a break from the city’s swampy heat and heading for their favorite beach, mountain retreat or family vacation jaunt far beyond the reach of the capital’s steam.
Credit union advocates and executives around the country, likewise, have typically taken their cues from the Washington evacuees and headed out to their favorite summertime dachas and diversions, confident that Congress (being out of town and all) could do no damage, and that regulators would take a breather too.
But this year isn’t typical.
For one thing, the Washington weather hasn’t been as tropical as in years past. For another, it’s been a much busier month for preparing and filing comment letters on key issues.
In fact, for the last two years, August has become much more active in terms of “comments due” on proposed and final rules, and on notices from NCUA. Some of the comments due are for mundane items (such as those asking for “reinstatement without change of a previously approved [information] collection”). Another annual (and relatively routine) August comment due date is for NCUA’s review of one-third of its outstanding rules and regulations. While the subject receives fewer comments, it nonetheless can be a substantive (and important) undertaking.
Prodigious Comment
However, even discounting for those items, August in ’16 and ’17 has been prodigious, with 16 comments-due dates between them (11 last year and five this year). Twelve of the comment calls (for eight in 2016 and four this year) were for “non-mundane” issues.
In a climate change-like manner, the average “comments due” total has been rising slowly (despite the cooler temperatures this year – go figure). Both this year and last, the numbers have exceeded the 20-year average of 1997-2016, with 3.5 comments-due dates per August. (Discounting for the “mundane” items, the average is 2.3 due dates in the month.)
Old-timers remember when August was devoid of comments due: In fact, there have been five of the months in the 20-year period when no comments were on tap (much to the relief of credit union advocates across the land), the most recent being in 2012. In nine of those years, there were two or less due dates.
Those days have apparently dissipated – but the issues at hand seem to have intensified, especially this year.
The first full week of the month alone (on Monday, Aug. 7), comments were due on three proposals: amending NCUA procedures for appealing material supervisory determinations to the NCUA Supervisory Review Committee (SRC); revamping NCUA’s procedures for appealing decisions to the board of directors, and; a re-tooling of the procedures that federally insured credit unions must follow when merging voluntarily with another credit union.
The Most Significant
Of those three, the third is likely most significant for many credit unions as it affects the sort of member outreach they need to perform when a merger between credit union is underway. Judging from the passionate remarks filed by the due date, the proposal is of keen interest.
There’s more to come: Aug. 29 is the due date for comments on a revised methodology for the “overhead transfer rate,” which will determine how NCUA allocates earnings from the NCUSIF to help pay for its budget. For credit unions, it’s a money issue (the most sensitive breed), as the outcome of the proposal will have on impact on how much federal charters pay in operating fees, and the value that state charters feel they receive from the agency for the money they pay to keep their federal share insurance intact.
And while a Sept. 5 upcoming comment-due date on a proposal to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) is outside of the August purview, it -- along with another proposal, also due Sept. 5, on calculating declared equity distributions from the NCUSIF -- will nonetheless keep letter writers busy in August. Both are also money issues since, as proposed, they will lead to the payment of credit unions’ individual shares of between $600 million and $800 million being sent back to credit unions from the corporate fund in 2018. Likely, that prospect alone will keep advocates off the sand and the mountainsides, and hard at work in offices and studies.
NCUA is not alone in ramping up the August regulatory commentary work: The Office of the Comptroller of the Currency released a proposal at the beginning of the month to revamp implementation of the controversial “Volcker Rule,” a Dodd-Frank Act provision which bans banks from conducting certain investment activities with their own accounts, and limits their relationships with hedge and private equity funds. While comments are due Sept. 21, it is nonetheless a major proposal that has all of a 45-day comment period.
Something Else Bubbling?
Is this all some nefarious plot by regulators to deny summer-break time to advocates? Or is it a sign of something else bubbling?
Bet on the latter. Despite the distractions it may be facing, the Trump Administration (and the officials it has appointed at the heads of federal financial institution regulators) has decidedly uncorked a spirit of change across the financial institution regulatory landscape, with a different approach to regulation from that of the previous eight years. The proposals to close the corporate fund and revamp the Volcker Rule are particularly ardent signs of the new spirit.
It’s no coincidence that the leaders of the two agencies leading the charge on these proposals -- J. Mark McWatters as NCUA Board chairman, and Keith Noreika as acting Comptroller of the Currency, respectively – are Trump appointees.
Regardless of how this spirit may be viewed– right or wrong, good or bad, left or right, up or down – there is little doubt it is taking hold.
A tradeoff of a cooler Washington August for a heated-up comments-due schedule may be a tough one for some credit union advocates to swallow (and no doubt there is plenty of grumbling going on). But if this atypical August is any indicator of what’s to come in the typically busier months of the fall and winter, there are some more spirited days to come.
Pat Keefe has worked for all three national credit union trade associations over 33 years, focusing on communications. He is the editor of a soon-to-debut resource for journalists about federal financial institution regulation. (pkeefe@regreport.info)