Regulatory Crystal Ball Remains Murky
It's often said that personnel equals policy.
And if that's the case, then the crystal ball for predicting the regulatory climate and direction facing credit unions is decidedly clouded.
The direction of policymaking at the NCUA may partly hinge on filling vacancies on the agency board, according to NAFCU President/CEO B. Dan Berger. He said improving the regulatory climate for credit unions may require President Trump to appoint another Republican to fill a vacancy on the board.
“A lot depends on getting another board member,” Berger said in an interview with CU Times. “I think that's what it's going to take,” he said.
The policy direction of the CFPB will also depend on who has the reins at the agency.
“With Director [Richard] Cordray's future in question, whether he's running for Governor in Ohio or just departing the CFPB, there's uncertainty there like we haven't seen there before,” Paul Gentile, president of the Cooperative Credit Union Association, said.
If Cordray, an Obama Administration nominee, leaves, a Trump-nominated director would likely slow down rulemaking at the agency.
A new director may also bring a much-needed fresh perspective to the agency, Elizabeth Eurigibian, CUNA's chief advocacy officer and senior counsel, said. She said that a new director might better target agency rules, providing some relief to credit unions.
“Credit unions have not created the problems in the industry,” she said.
Still, given the poisoned climate in Washington, there is the possibility that gridlock will hinder all regulatory moves, attorney Kathy Winger said.
“There's a risk that nothing will change,” she said. “It's difficult to get anybody to agree on anything.”
Nonetheless, both agencies are engaged in several high-profile rulemaking activities.
Following the Trump Administration's lead, the NCUA has begun an extensive review of many of its regulations.
“My expectation is that those rules that can be pared back easily will be first up and that the reg review teed them up,” Bruce Jolly, an attorney with Reed & Jolly, said.
And he predicted that major rules now in the development stage will not be slowed by the regulatory review.
“As for the ‘heavy-lifting’ to use the chair's term at a recent board meeting, those major issues are already identified and will be addressed as soon as staff can get them prepared for action without waiting for the ‘reg review’ process to calendar them,” Jolly said.
Despite the regulatory review, the agency will continue its rulemaking, Eurigibian said.
“I think they’re going to conduct business as usual,” she predicted. “I don't think the regulatory review will slow their regulatory rulemaking.”
Aside from the regulatory review, the agency has several rules under development, Gentile said. For instance, he said, the agency is reviewing comments on proposed rules that would require greater disclosure of employee compensation and other information in credit union mergers.
And the agency just ended the comment period on proposed rules that would allow an early closing of the Temporary Corporate Credit Union Stabilization Fund, with the balance in the fund being transferred into the share insurance fund.
In addition, the NCUA has announced a major reorganization, including the closing of two regional offices – Albany, N.Y., and Atlanta.
“The closure of two regional offices changes how the NCUA is on the ground at credit unions,” Gentile said.
Credit unions remain unhappy with the CFPB, according to John McKechnie, senior partner at Total Spectrum.
“The nearly unanimous verdict by credit unions on the CFPB is ‘enough is enough,’” he said. “There have been too many one-size-fits-all, overly complex and punitive rules from the CFPB, and I think any willingness to give the benefit of the doubt is gone.”
The CFPB has been extremely unpredictable, attorneys and trade group officials said.
“A lot of regulations come out in a short period of time,” Eurigibian said. “We’re sort of used to that dynamic.”
The agency has been reviewing more than a million comments on its controversial payday lending rule and the final rules could be released soon.
Credit unions did get some welcome news from the agency in the form of changes in the home equity line of credit reporting level under the Home Mortgage Disclosure Act, Gentile said.
Gentile also said the agency could release a proposed rule on overdrafts at any time.
All in all, it makes for a stressful time for credit unions and compliance officers.
“Compliance is a full-time job,” Andrew Keeney, co-chair of the credit union practice at Kaufman & Canoles, said. “It is expensive to comply and often the rules keep changing.”
And expecting any regulatory relief is often a futile effort.
“Waiting for relief from regulations is like hoping for a snow day before the big test,” Jolly said. “We are advising credit unions to get ready now for upcoming changes and if relief comes as it did for some on HMDA/HELOCs, continue to prepare.”
And while most people contend that uncertainty creates anxiety, the opposite may be true as well, McKechnie said.
“I realize it's fashionable to say that ‘everyone wants certainty,’ but I’m not sure that's true,” he said. “Certainty isn't a good thing if you’re certain that there is going to be a bigger and more burdensome set of regulations.”