Four years ago, our nation was thrown into the deepest economicmorass since the Great Depression. No question, the situation wasdire. People lost their jobs and their homes. Banks and companiesclosed. Government officials scrambled to help bolster our fragileeconomy. 

Regrettably, in their zeal to remedy the situation, Congressused a Gatling gun, the Dodd-Frank Wall Street Reform and Consumer Protection Act, whena much more surgical strike might have been more effective toregulate the bad actors responsible for propelling us intofinancial turmoil. 

It has been two years since the adoption of this behemoth law,the source of approximately 400 rules for the financial servicesindustry.

Where are we now?

According to Davis-Polk, only 55% of the rules required byDodd-Frank have been proposed. And, as of July 2, a total of 221Dodd-Frank rulemaking requirement deadlines have passed. Yet, only81 of those rules have been finalized. The remainder of the ruledeadlines were missed.

The new Consumer Financial Protection Bureau, a direct result ofDodd-Frank, is exacerbating an already complex regulatorylandscape. CFPB is tackling mortgage disclosures, credit carddisclosures, remittance transfers, student loans and overdraftprotection programs, with more to come.

Most recently, the CFPB announced the creation of a credit cardconsumer complaint database and its plans to reform the mortgageprocess. According to the CFPB, its consumer complaint databasewill only include data involving providers with more than $10billion in assets. But as NAFCU has said all along, the rippleeffect will be felt by financial institutions below that threshold,especially credit unions. The bureau also issued a request forcomment on extending the database to other financial products, suchas mortgages, checking accounts, savings accounts, check cashingservices and remittance services.

NAFCU was quick to express our concerns with the database. Wefear it may open a Pandora's box of frivolous and unsubstantiatedcomplaints and potential reputational risks through viral mediathat could raise unwarranted concerns about the safety andsoundness of solid financial institutions.

Of course, the CFPB is not the only regulatory agency thatcredit unions deal with. The NCUA is examining concentration andinterest rate risk, loan participations, credit union serviceorganizations and appraisal management. At the same time, theDepartment of Justice, the Department of Labor and the FinancialCrimes Enforcement Network have continued to issue new rules, ineach case without any regard for what any other agency may bedoing. But credit unions, that were in no way responsible for thefinancial crisis, must comply with the mounting burden anyway.

And the compliance burden is enormous. Regulators estimate thatit will take American businesses more than 24 million hours everyyear to comply with just the first 225 of the estimated 400 rulesin the law.

The FinancialStability Oversight Council, also a product of Dodd-Frank, iswell-positioned to rectify the lack of coordination. Chaired byTreasury Secretary Tim Geithner, the council brings together theheads of the NCUA, the FDIC, the Federal Reserve Board, the Officeof the Comptroller of the Currency, the CFPB and federal securitiesand commodities regulators. To this end, I recently wrote toGeithner urging his leadership to help bring order to thisregulatory quagmire.

I asked that the FSOC create robust interagency coordination onthe issuance of rules impacting financial institutions. Further, Iurged the FSOC to establish policy requiring member agencies toconduct and publish a thorough cost-benefit analysis prior toissuing regulations, a separate cost-benefit analysis a year aftereach regulation the agency prescribes and another every other yearthereafter. I am hopeful that with Geithner's leadership, the FSOCwill help make our regulatory landscape more manageable.

Rest assured, NAFCU will continue the drumbeat on the need forregulatory coordination to help you deal with the overwhelmingregulatory challenges you are facing. Despite these challenges,credit unions are doing well and poised to excel in the years tocome.

While it will require even greater agility to thrive in thisclimate, it is not impossible. As Donald Sull, a professor ofmanagement practices at the London Business School and author of“Upside of Turbulence” wrote recently: “Market turbulence did notbegin with the fall of Lehman Brothers, and it will not end whenthe global economy recovers.” He also astutely noted that sometimesjust staying in the game is the key to long term-success.

That quote is perfect for our industry at this moment in time.We have not only endured and stayed in the game, but are the bestpositioned among all those in the financial services industry. Wehung in there and stuck to our principles when the economyfaltered. We even managed to grow to a record-breaking $1 trillionin assets and gain more than one million new members. Now, it istime for us to capitalize on our successes and take our industry tothe next level. I have no doubt we have the agility to mitigate andnavigate our way through this new and complex regulatory worldwhile continuing to meet the needs of our members. 

Fred R. Becker Jr. is president/CEO at NAFCU.
Contact 703-522-4770 [email protected]