The NCUA formally adopted a “No Regulation-by-Enforcement” policy on Wednesday, clarifying that enforcement actions will not be used to set or reinterpret regulatory standards.
NCUA Chairman Kyle Hauptman said the move fulfills a pledge he made in January to codify procedures ensuring fairness and transparency for credit unions. “No enforcement action should ever set — or even clarify — policy,” Hauptman said. “In America and other free societies, the sequence is: Set speed limits, then give speeding tickets.”
The new policy directs that enforcement will only occur in cases of clear, significant violations of existing law or regulation, and will not be driven by quotas, deadlines or attempts to inflate enforcement statistics. Hauptman emphasized that the NCUA’s goal is to resolve issues and keep credit unions operating safely, not to generate headlines or career advancement opportunities for staff.
The statement also stressed due process, noting that civil servants enjoy protections against arbitrary actions and that credit unions deserve the same. If the NCUA identifies harmful practices not covered by existing rules, the agency said the proper course will be to pursue rulemaking, not enforcement.
Hauptman called the policy both a safeguard and reaffirmation of good governance: “It’s counterproductive for a deposit insurer to engage in regulation-by-enforcement against the same institutions we insure. Americans expect better from their government, including financial regulators.”
The NCUA said the new guidance is not a response to any recent agency action but reflects a commitment to transparency and fairness going forward.
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