WASHINGTON (12/5/13)--"The crisis of creeping complexity with respect to regulatory burden is very real" for credit unions and other community-based financial institutions, Rose Bartolomucci, president/CEO of Towpath CU, a state-chartered, privately insured credit union in Akron, Ohio, said in Wednesday testimony before members of the House Financial Services subcommittee on financial institutions and consumer credit.
Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan, right, and Rose Bartolomucci, president/CEO of Towpath CU, Akron, Ohio, speak with Rep. David Scott (D-Ga.) during Wednesday's hearing. Several subcommittee members on Wednesday said they saw the need for greater regulatory relief for small institutions, including Rep. Mel Watt (D-N.C.), who is himself a nominee to lead the Federal Housing Finance Agency. (CUNA Photo)
Bartolomucci testified on behalf of the Credit Union National Association and her credit union at a hearing entitled "Examining Regulatory Relief Proposals for Community Financial Institutions." The hearing focused on three bills: A bill to require the National Credit Union Administration and other federal financial regulators to assess and address regulatory duplication or inconsistency; legislation that would allow privately insured credit unions to join a Federal Home Loan Bank (FHLB); and a bill that would adjust the Consumer Financial Protection Bureau's rural designation to align with the definition used by the U.S. Department of Agriculture.
"Small credit unions are expected to comply as quickly and efficiently as large financial institutions with hoards of compliance officers. While the elimination of one duplicative rule or regulation may not seem like much, to a compliance officer in a credit union, it is. Without one more rule to comply with that employee can now spend time with a credit union member, helping to serve their financial needs," Bartolomucci said in written testimony.
Responding to committee questions later in the hearing, she noted that regulatory compliance issues have hampered her credit unions' attempts to serve its 21,000 members, Bartolomucci, who is also a former Ohio state credit union regulator, told legislators her credit union has 47 employees, with one full time compliance officer and a shared compliance officer that also works with two other credit unions. The cost of compliance can make it more difficult for her credit union to offer new products to members, she said. Compliance costs and regulatory burdens "will take the lives of some of our credit unions," she noted. Some credit unions cannot afford the cost of compliance, and thus seek out strategic mergers, she added.
Allowing privately insured credit unions to join FHLB would not put taxpayers at risk, Bartolomucci said. FHLB members have to fully collateralize their advances, and "how you are insured does not come into play," she added.
Legislators at the hearing agreed there is bipartisan desire to address regulatory issues faced by credit unions and other small financial institutions, with ranking subcommittee member Gregory Meeks (D-N.Y.) noting that small financial institutions are facing severe regulatory problems.
One subcommittee member, Rep. Ruben Hinojosa (D-Texas), said it is important to listen to credit unions and other small institutions, because their communities rely on them for access to credit. Smart regulatory relief is an area that is ripe for bipartisan collaboration, he added.
Another subcommittee member, Maxine Waters (D-Calif.), noted the strong support that credit unions enjoy from members of both parties.
Shelley Moore Capito (R-W. Va.), who chairs the subcommittee, noted that reducing regulation does not mean getting rid of all regulation. Moore Capito said she is trying to help create smarter, more forward thinking regulations.
Rep. Sean Duffy (R-Wisc.) said the Wednesday hearing was a good example of members of both parties working together early to get bipartisan bills moving in the right direction. He also said he hopes that credit unions and community banks will be able to focus less on regulators and more on making loans.
For CUNA's prepared hearing testimony, use the resource link.