WASHINGTON — Two credit union witnesses voiced disagreementsover the impact the Dodd-Frank Act has had on their credit unions when theytestified July 19 before the House Financial ServicesSubcommittee on Oversight and Investigations.

Lynette Smith, CEO of the $87 million Washington Gas LightFederal Credit Union of Springfield, Va., and DeyaniraDel Rio, board chair of the $33 million Lower East SidePeople's Federal Credit Union of New York City and vice chair ofthe NationalFederation of Community Development Credit Unions testified atthe last Thursday's hearing that is part of a series ofcongressional hearings reviewing the effect Dodd-Frank has had onmarkets and consumers.

The hearing was packed with witnesses friendly to conservatives,who oppose the CFPB and the Dodd-Frank legislation. As such, allwitnesses, except Del Rio, described how the bill's increasedregulations have caused burdens for their organizations.

Del Rio, who was the Democrat-invited witness, told thecommittee that Lower East Side People's FCU has not been harmed in any way byDodd-Frank. In fact, the credit union is seeing an influx ofmembers from unfriendly banks, and lending and profits haveincreased.

Smith told a different story, saying the overall complianceburden is overwhelming for Washington Gas Light FCU. It's hard for an $87 million creditunion to keep with all compliance requirements, she said.

“We're going to have to hire a full-time compliance officer,”she told Rep. Jim Renacci (R-Ohio), who asked about her creditunion's burden. Renacci asked Smith if she fears increasedcompliance costs will force her to increase fees to members.

“Yes, it could, down the road,” Smith said. “Credit unions havealways been a lender of last resort. When I have members come to myoffice and I know they have no other place to go, I can providethem a loan in an hour, and I want to continue to do that .The nextday, they're bringing me cucumbers from their garden. That'sgrassroots, that's what credit unions do.”

Renacci then challenged Del Rio's testimony about Dodd-Frank,saying, “You act like you have no concerns.”

Del Rio replied that her credit union complies with a wide arrayof consumer protections, and Dodd-Frank won't add a significantburden. Additionally, Lower East Side People's FCU does notanticipate having to raise fees to cover the costs of compliancefor new regulations.

“The majority of those pages don't apply to us,” she said.“There will be some disclosures and reporting, but that's muchdifferent than having to revamp your whole business model.”

Smith countered Del Rio's statement by saying, “A $34 millioncredit union may not have all the same services as an $87 millioncredit union. We're trying to compete with the big banks.”

Del Rio attempted to respond, but Renacci said he was out oftime. Later, when asked a question by Rep. Gary Miller (R-Calif.),Del Rio shot back. “We prioritize where and how to offset costs,and because we never became dependent upon high fees, we are notnow scrambling to find how to make it up,” she said.

Furthermore, Del Rio said, her credit union has been challengedby regulators and consultants to charge members more fees, butLower People's East Side prefers to earn revenue from loan interestincome instead.

“We want to make our income in a way that is responsible andgenerates activity in our community,” she said.

Rep. Michael E. Capuano (D-Mass.), responding to Smith'stestimony, said the hearing was the first he had heard about theburdens CFPB's proposed remittance disclosure rule would have onfinancial institutions.

“I'm under the impression that this aspect has not beenfinalized, and I intend to look into it,” he said.

NAFCU quantified the effect some regs currently have on creditunions with a member survey on the subject. The results werepublished in the July issue of its “Compliance Monitor.” Researchrevealed that credit unions currently spend an average of 207 hoursper year complying with the CARD Act of 2009 and nearly 60 staffhours each month meeting current mortgage disclosurerequirements.

Carrie Hunt, NAFCU general counsel and vicepresident for regulatory affairs, said a conservative estimate ofhow new and coming Dodd-Frank regulations would increase thecompliance burden would be a quadrupling of staff hours. The newTILA/RESPA combined disclosure rule only, which was recentlyproposed by CFPB, will require as much time to comply as the CreditCARD Act currently does, she said.

NAFCU President/CEO Fred Becker said his trade organizationtends to represent the larger credit unions in the industry.

“Just imagine the impact on smaller credit unions,” he said,referring to the compliance staff hours currently required ofcomparably larger credit unions that responded to the survey.

Dodd-Frank has also affected the trade organizations themselves.NAFCU hired an additional compliance attorney in late 2011 to answera higher volume of compliance questions from members. And, the acthas created a “very fast and furious” pace at the trade group,according to Hunt, as NAFCU submits comments to Congress and theCFPB regarding new and proposed regulations.

CUNA General Counsel Mary Dunn used just one word to describethe effect Dodd-Frank has had on her organization: chaos. Not onlyhas CUNA had to weigh in on the flow of new regulations from CFPB,the trade has had to develop relationships with contacts in a newregulating agency and educate them about credit unions.

“Dodd-Frank created a whole new regulatory world that is likeAlice in Wonderland,” she said. “It's like we've stepped into thisrabbit hole that Dodd-Frank created.”

Dunn estimated CUNA staffers and management work an average of30% more each week to keep up with Dodd-Frank regs, with longerhours during the week and time put in on weekends. However, Dunnsaid CUNA has not polled its membership to quantify the Dodd-Frankeffect, saying such an effort would only add to the existingburden.

In addition to new regs from CFPB, Hunt said “when it comes toregulation, it's 'monkey see, monkey do,' and we have someone-upmanship going on.”

However, Hunt said she was grateful the NCUA has only finalizedhalf of the proposed rules expected this year.

The NCUA has also been affected by Dodd-Frank but not to theextent the credit unions it regulates has been impacted. Theregulator has made some required organizational changes, such ascreating the Office of Minority and Women Inclusion and reporting about itsdiversity to Congress, said Todd Harper, director of public andcongressional affairs.

The NCUA also has had to make some required rulemaking changesand coordinate regulation with the CFPB, he said.