As minimal as possible, as much as necessary

Without order there is chaos. Without laws there is anarchy. Without rules there is confusion.

Knowledgeable individuals recognize that without these elements in play, our society would not exist as it does. Everyone could do whatever they choose without any legal consequences. The ability to exist as civilized people would not be possible.

Arguments could be made that we have too many laws and regulations and that these laws and regulations somehow impede one’s ability to live a good life. Or that the constraints placed on businesses prevent them from being as successful as they believe they could be.

When over-regulation exists, it is important that those who have the ability and authority review the laws and regulations to make sure that, while they may be needed, laws and regulations are not intrusive and do not impact a person or business in a way that they cannot function or be successful.

When I appeared before the Senate Banking Committee for confirmation as NCUA Chairman in 2008, I said that I wanted to see regulation standards as minimal as possible and as much as necessary. During my term on the NCUA Board that is what I have strived to do.

In addition, as I have previously discussed in the NCUA Report, the NCUA Board reviews one-third of its regulations each year or sooner if a question is raised about a regulation or someone suggests a better way to write a rule. The one- third policy assures a continued and consistent review of what is on the books. The regulations to be reviewed are posted on the NCUA website and comments are welcomed from the industry and general public.

There is now much concern over the amount of regulations being written and imposed by the Consumer Financial Protection Bureau. At times, the regulations appear out of sync with credit unions. When this happens, NCUA and its Office of Consumer Protection have a role to play in explaining to CFPB that one size does not fit all. Occasionally, we are successful in reaching an agreement and revisions are made. When we can provide such assistance, we do.

There are some who believe that NCUA should cease proposing any new regulations to compensate for the regulatory burden being placed on credit unions by CFPB. Hard to believe, but these are often the same people who said the corporates were fine, they should not be conserved, and no action was needed. To stop what needs to be done because another regulator is allegedly increasing the regulatory burden is not practical.

The best approach is always a common sense one. If you see a problem, address it. The lack of liquidity and capital caused the corporate downfall. If NCUA fails to address those issues for natural person credit unions, we would be remiss in our responsibilities.

NCUA, however, can target our rules to focus  on the problem. We can also tailor our rules to minimize the regulatory burdens on small credit unions. We did just that with our final rule on liquidity and contingency funding plans. We also did it with our rule on interest rate risk.

A responsible regulator addresses problems as it sees them. You don’t stop doing what needs to be done because the burden is getting harder to carry. Rather than point a finger and complain, you work cooperatively with the industry you regulate to shoulder the burden together. As minimal as possible, as much as necessary.