Just because you're paranoid, doesn't mean The Manisn't out to get you.

This overused saying nonetheless applies to all theannouncements this past week by financial regulators seeking newauthorities not only over entities they currently oversee, but overnew ones as well.

Leading the pack for credit unions is the announcement by theNCUA in its September newsletter that it will ask Congress for newsupervisory authorities over vendors. An NCUA requirement forvendors to submit financial statements isn't a new idea. Otherbanking regulators already require such disclosures; the NCUA isone of the few that doesn't. And, the NCUA was granted temporaryauthorities over vendors during Y2K.

But is it even necessary? NCUA Board Member Michael Fryzel toldme in July he agrees with legal opinions he's read that say theagency already has the legal standing to require CUSOs to providefinancial information. Fryzel's hang up isn't over legal authority,but the costs involved: $1 million to launch the new rule and$500,000 per year to maintain it.

So why would the NCUA need to ask Congress for theauthority?

And further, would the NCUA really make good use of theinformation? After all, the NCUA had examiners on site atcorporates and was well aware Western Corporate Federal CreditUnion was investing in mezzanine security positions. The UnrealizedLosses blog was sounding the alarm bells well before the crisis, aswere a number of credit unions. (It's a shame those credit unionsmistakenly thought the losses wouldn't flow downstream.)

Bottom line: the problem wasn't authority, but rather, thatcorporate examiners were slurping from the same Kool-Aid fountainas corporate executives and their volunteer boards. The red flagswere there. The problem is that nobody wanted to see them.

On its face, the ability to anticipate the next financial crisisis a good one. However, that rationale alone should not be used tosupport the need for expanded supervisory powers.

Credit unions are already burdened with increased regulatoryburden from the Consumer Financial Protection Bureau, which has yetto prove it is motivated more by a desire to prevent the nextcrisis than by a Quixotian idealistic crusade.

Fair lending laws are also in the spotlight, as credit unionsnot only have to deal with fields of membership that make themstatistical outliers, but also the additional lending scrutinydisparate impact provisions require by law. (Unless the SupremeCourt rules otherwise.)

On Sept. 18, Comptroller of the Currency Thomas J. Curry, who isalso chairman of the Federal Financial Institutions ExaminationsCouncil, said he's pushing for more exam oversight ofcybersecurity, noting recent DDoS attacks.

Large institutions with more than $1 billion in assets seem tohave their cybersecurity defensive strategies in place, but Currymade a good point when he said hackers will increasingly targetsmaller, unprepared institutions.

More supervision may seem like a good idea, but where will itlead? Is it unrealistic to envision that someday all credit unionswill be required to outsource all digital activities to servicebureaus? Remember, these vendors would be included in the NCUA'srequest to regulate third-party providers. The move could reducecredit unions to just a friendly face.

One of the least controversial attempts at increased supervisorypowers is the NCUA's announcement that it is writing a proposedrule that would require the four credit unions with more than $10billion in assets to file stress testing results. Because of sheersize, these credit unions already conduct stress testing, so itdoesn't appear that the requirement would result in increased costsor staff burdens.

Jim Blaine, president/CEO of the $27 billion State Employees'Credit Union of Raleigh, N.C., said he supports the NCUA making theresults of the stress tests public. Of course, Blaine's position isno surprise; after all, he famously challenged the NCUA when hereleased his CAMEL rating. A positive stress test result wouldsupport Blaine's position that his balance sheet is rock solid,despite comments by the NCUA that the regulator would 'sleep betterat night' if he decrease his mortgage portfolio risk, despite theloans falling within regulatory standards.

The NCUA and CFPB aren't the only regulators seeking newauthorities. The Washington state regulator began conductingseparate consumer compliance exams Sept. 11. Linda Jekel, directorof the state's credit union division, told Credit UnionTimes the new exams will ensure state chartered credit unionsare compliant with CFPB standards, and as a result, reducepotential liability and fines.

It's not the first time state regulators have been strong armedby federal rules. The NCUA's derivatives rule and troubled creditunion rule already step on state regulatory toes.

I like a good conspiracy theory more than the average person,but I always hope they aren't true. It stinks when the federalgovernment acts in ways that support conspiracies. Quotes fromfolks like Rahm Emanuel, who famously said government should neverlet a good crisis go to waste, don't help.

It's no wonder credit unions continue to look over theirshoulders, paranoid they're in federal cross hairs.

Heather Anderson Executive [email protected]