Despite a June 4 Memorandum of Understanding released jointly by five federal financial supervisory agencies that outlines how they will coordinate their supervisory activities to reduce regulatory burden, NAFCU President/CEO Fred Becker has asked Treasury Secretary Timothy Geithner, acting as chairman of the Financial Stability Oversight Council, to intervene on behalf of credit unions.
“As we have approached each agency regarding the ever-increasing regulatory burden, they quickly respond that the rules being issued by other agencies are outside of their purview,” Becker wrote in a letter to Geithner on June 27. “NAFCU believes the FSOC is well-positioned to rectify this lack of coordination. We ask that you establish within the FSOC robust interagency coordination on the issuance of rules impacting financial institutions.”
Becker cited Consumer Financial Protection Bureau new and pending rules, new and pending NCUA rules on concentration and interest rate risk, loan participations, credit union service organizations and appraisal management, Department of Justice regulations on physical assess to ATMs, Department of Labor regulations on employee rights and the Financial Crimes Enforcement Network regulations on currency transaction reports and suspicious activity reports as examples of regulatory burdens on credit unions.
Under the Dodd-Frank Act, the FSOC has a duty to facilitate regulatory coordination, Becker said. This duty includes facilitating information sharing and coordination among the member agencies of domestic financial services policy development, rulemaking, examinations, reporting requirements and enforcement actions.
Through this role, the FSOC is effectively charged with ameliorating weaknesses within the regulatory structure, promoting a safer and a more stable system, the NAFCU president said.
“NAFCU also urges the FSOC to establish policy requiring member agencies to conduct and publish a thorough cost-benefit analysis prior to issuing regulations as well as a separate cost-benefit analysis a year after each regulation the agency prescribes and every other year thereafter,” Becker wrote.
The NAFCU leader also recommends a cost-benefit analysis every two years on each regulation an agency has on its books, with the agency required to justify the regulations’ continued existence.
“These cost analyses should be reviewed by the FSOC to assess the total impact on the financial services industry. We strongly believe that conducting such exercises would better instruct regulators of the high cost of compliance, and equip them with the information necessary to assess whether a particular regulation is effective and justifiable,” Becker said.
Section 1025 of Dodd-Frank requires that the CFPB, along with the NCUA, FDIC, Federal Reserve and the Office of the Comptroller of the Currency, coordinate aspects of their supervision of insured depository institutions with more than $10 billion in assets.
The coordination includes scheduling examinations, conducting simultaneous examinations of covered depository institutions unless an institution requests separate examinations, and sharing draft reports of examination for comment.
Under the June 4 MOU, the agencies pledged to coordinate examinations and other supervisory activities, share supervisory information concerning compliance, coordinate consumer compliance risk management programs, and coordinate activities such as underwriting, sales, marketing, servicing, collections, if they are related to consumer financial products or services.