Templeton: Reg burden big before Dodd-Frank, now also unpredictable

5-9-12 Capito and Templeton, Hearing on reg burden
  SRP FCU President and CEO Ed Templeton (right),
  shown here with Subcommittee Chair Shelley Moore
  Capito, R-W.Va., told lawmakers that credit unions are
  straining under the burden of growing regulatory
  compliance costs.                              – NAFCU photo

May 10, 2012 – NAFCU witness Ed Templeton told lawmakers Wednesday that a particularly difficult challenge for credit unions in dealing with rising compliance costs is the inability to plan for the next spate of rules to come under the Dodd-Frank Act.
 
“Many [Dodd-Frank Act] rules haven’t been written yet,” Templeton, president and CEO of SRP FCU and NAFCU’s board treasurer, said. The problem is figuring out “how we’re going to keep pace with the rate of [regulatory] change.” When he and other witnesses were asked if they could do a five-year plan anymore under the new law, Templeton said that is now “almost impossible.”
 
Templeton was testifying Wednesday before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. The hearing was held to generate input on the impact of rising regulatory compliance costs – under Dodd-Frank Act rules and other measures – on small institutions.
 
The NAFCU board member had plenty to share on how credit unions are doing in today’s regulatory environment:

  • Templeton noted that nearly all, or 96.4 percent, of credit unions in a NAFCU survey last spring said they were devoting more staff time to regulatory compliance than they did in 2008. About 14.1 percent of total working hours went to the compliance function.
  • SRP FCU recently increased its compliance staff from one employee to two to deal with rising compliance requirements. Templeton as well as his staff all spend much more time now on compliance issues than before.
  • With $600 million in assets, SRP FCU is well below the $10 billion-in-assets threshold for institutions directly targeted by the Dodd-Frank Act’s debit interchange rule, but it is seeing a decline in its interchange fee rate. To deal with the decreased revenue, it has pulled back on activities that don’t produce revenue, such as community financial education.

Templeton generally gave the CFPB favorable marks on its approach to its role under the law, but he said results of the bureau’s work on mortgage lending rules – which have yet to take shape – is one of the great unknowns facing credit unions in an already challenging regulatory environment.
 
Indeed, Templeton said there are so many “i’s to dot and t’s to cross” that the credit union seems to spend more time making sure it has all the rules covered than focusing on service to members. He said that isn’t a common-sense approach to regulation.
 
With respect to known burdens, witnesses were asked to name what rules they would like to see eliminated now. Templeton said he would pass H.R. 4367 to repeal the ATM placard rule on fee disclosures.
 
If the placard is missing – whether due to theft or negligence – an ATM owner can be hit with class action and hundreds of thousands of dollars in fines and damages. “This is a requirement that technology has replaced,” Templeton said. “Everyone is at risk.”