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70 Percent of Recent Rules Provide Relief or Clarity, NCUA Says
Wednesday, April 9, 2014 6:55 AM

Seventy percent of the new rules approved by the National Credit Union Administration Board since January 2013 have provided regulatory relief or greater clarity for credit unions without additional costs, the agency told a congressional committee today.

“Since the beginning of 2013, the NCUA Board has approved 17 final rules,” NCUA General Counsel Michael J. McKenna said. “Of those, one was required by the Dodd-Frank Act. Five provided regulatory relief. Four addressed safety and soundness matters, and the remaining seven rules were technical in nature. In other words, 70 percent of NCUA’s recent final rules have provided regulatory relief or greater clarity without imposing new compliance costs.”

McKenna testified yesterday before a House Financial Services Committee hearing on the economic impact of financial services regulation. His testimony is available online here.

Citing the goals of NCUA Board Chairman Debbie Matz’s Regulatory Modernization Initiative, McKenna told the Committee that NCUA works very hard to achieve balance between the responsibilities of maintaining safety and soundness on behalf of credit unions’ 96 million members and the effects of regulations on credit unions’ bottom lines.

“NCUA is working to streamline its regulatory framework,” McKenna told the Committee. “Through this initiative, the NCUA Board has approved four targeted rules to mitigate risk and six rules to cut regulatory burdens. Rather than adopting one-size-fits-all regulations, NCUA targets rules to risk and asset size and strives to ensure rulemaking is reasonable and cost-effective.”

As an example, McKenna described the rule that updated the definition of a small credit union. The rule, approved in January 2013, raised the asset threshold for a “small” credit union from $10 million to $50 million in assets and under. That resulted in two-thirds of federally insured credit unions being exempt from regulatory requirements not suitable for institutions of their size. The rule change also meant 2,270 credit unions became eligible for various forms of free assistance from NCUA’s Office of Small Credit Union Initiatives.

McKenna additionally said NCUA’s rolling three-year rule review process ensures the agency’s regulatory framework is up-do-date, effective and reflects the current environment. This also promotes greater transparency, he said, as the agency publishes a list on its website of those regulations up for review each year and invites public comment.

In addition to modernizing regulations, McKenna said, NCUA has streamlined the examination process for smaller credit unions and re-allocated resources to focus on the largest potential risks to the National Credit Union Share Insurance Fund.

As always, McKenna said, the agency’s primary responsibility is to protect the safety and soundness of the credit union system and prevent losses to the Share Insurance Fund, which must be paid by all credit unions.

“As we learned from the recent financial crisis,” he said, “the cost of inaction can sometimes be greater than the cost of action.”