WASHINGTON, DC (December 3, 2013) -- Big Valley Federal Credit Union President and CEO Linda Sweet will testify today on behalf of the National Association of Federal Credit Unions (NAFCU) in front of a House Small Business subcommittee on the importance of regulatory relief for credit unions, and how the dramatically increased regulatory burden has affected her credit union in particular.
Sweet, whose credit union is based in Sacramento, Calif., is testifying before the Subcommittee on Investigations, Oversight and Regulation, and will detail how lawmakers can help credit unions by stemming what she calls a “tidal wave of new regulations.”
“At Big Valley FCU, I have seen our compliance costs steadily climb from year to year, and skyrocket over the last few. Unfortunately, this is the same at many credit unions. A recent survey of NAFCU members found that of those credit unions that are increasing their education budgets for next year, 84 percent cited increasing compliance burdens as the most important factor for this increase,” according to Sweet’s testimony.
Sweet also explains how the dramatic increase in regulation has hurt her credit union’s ability to provide quality customer service and to offer the same level of products and services it has in the past.
“Now, we are often slower to offer services that our members want, and there are some services we have been forced to cut back on,” Sweet says. “For example, in many cases we are unable to offer a member a mortgage product that we were once able to. We have actually started to outsource many of our mortgages because we cannot afford a loan officer with the qualifications that new CFPB regulations require. In addition to requiring a member to turn elsewhere for a product we once offered them, they are faced with increased costs that often rise to several thousands of dollars. That certainly seems like an unintended and unnecessary cost to the consumer that the new agency was meant to protect.”
Sweet also emphasizes the impact of the thousands of pages of new mortgage regulations and guidelines from the Consumer Financial Protection Bureau (CFPB) on the National Credit Union Administration (NCUA) examination process: “The NCUA has changed the examination process over the years, which has resulted in the transformation from 3 to 5 days of helpful input and teamwork, to a process that now requires months of preparation. The examination time at Big Valley, from start to finish, takes roughly 90 days … Furthermore, it seems that these exams are taking longer due to the large number and complexity of regulations and not because of the increasing size or complexity of the credit union.”
Sweet urges lawmakers to do the following:
- adopt the measures of NAFCU’s five-point plan for regulatory relief and support legislation already incorporating such measures, including H.R. 2572, the “Regulatory Relief for Credit Unions Act,” introduced by Rep. Gary Miller, R-Calif.;
- strengthen NCUA’s administrative powers;
- modernize capital standards for credit unions;
- improve the federal credit union charter;
- raise the member business lending cap; and
- improve data security standards.
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