The president/CEO of the 9,800-member, $59 million TimberlandFederal Credit Union offered Congress an image of a small creditunion struggling to both meet the financial needs of itspredominantly rural membership and fulfill federal regulatory requirements at a Wednesdayhearing.

Carrie Wood represented the Dubois, Pa.-based cooperative aspart of a panel of witnesses before the Senate Banking, Housing andUrban Affairs Subcommittee on Financial Institutions and ConsumerProtection. Joining Wood were two banking executives as well as anexecutive from a housing non-profit group.

Wood told attendees of the hearing, titled “The State of RuralBanking,” that she has tasked five of her 15 staff members withhelping her keep up with changing regulatory requirements, whichhas resulted in an opportunity cost.

“When these team members are working on compliance issues, theyare not serving our members,” Wood testified. “They're not helpingthem get loans. They're not providing financial counseling. They'renot helping improve our processes and how we offer ourservices.”

Wood reported with each rule change, her staff and board membersmust make the time to understand the new requirement, modify thecooperative's computer systems, update internal processes, properlytrain staff on compliance liability and new policies, design andprint new forms, and produce educational materials for members.

“Rules are often changed in the name of consumer protection, butwhen they make it harder or more expensive for me to serve mymembers, that's not consumer protection,” Wood contended.“Sometimes the new rules are difficult for us to decipher, and moreso to explain and educate our members on the changes we are forcedto make.”

She also reported that due to the anticipation of additionalcompliance burdens, her cooperative delayed offering indirect autolending and decided not to offer small business loans for the timebeing.

Wood put the credit union's value in perspective by describingsome of the loans it provided.

“I once did a loan for a man who just had his fivegranddaughters move back in with him because his daughter lost herjob,” Wood related. “He needed $200 because the girls hadcontracted a medical condition at school. He couldn't afford thetreatments until his next Social Security check, and the girlscouldn't go back to school until he took care of them … we're alifeline for our members.”

The witness panel faced several questions from senators, mostbeing supportive. However, Sen. Elizabeth Warren (D-Mass.) told the two banking executivesthat she and fellow Democratic senators understood the need to easeregulatory burdens for small banks and credit unions, but would notroll back regulations for larger institutions.

Citing data from the Independent Community Bankers of America,she stated small banks received a boon after the passage ofDodd-Frank in the form of lower premiums on their FDIC insurance.She also pointed out during a banker's testimony that hisinstitution spent $250,000 on compliance costs, not countingsalaries – just a little more than the $230,000 the ICBA said smallbanks saved on their FDIC insurance because of Dodd-Frank.

Warren argued Dodd-Frank was “always a tradeoff,” and that moreregulation has been balanced by lower costs.