Promises And Paranoia At The GAC

Regulators and legislators promise reform to skeptical audience, plus other observations from four days in DC.

Another year, another GAC is behind us. Speaker after speaker regulators and lawmakers alike promised regulatory relief, promises met with equal doses of applause and skepticism from the couple thousand credit union leaders gathered in Washington this week for the movement’s biggest gathering.

As Mike Mastro, president/CEO of Firefighters First Credit Union ($954.5M, Los Angeles, CA), says, It’s good to see some appropriate attention and movement toward lightening the regulatory load a bit. I like what I heard, but the timelines on those things still seem very far away in terms of being implemented. We need those opportunities as quickly as we can get them.

More on those GAC pledges can be read in the trade publications, including Credit Union Times’ coverage of announcements about supplemental capital and field of membership rules and continued counterpoint from new board member Mark McWatters.

McWatters repeated his call for NCUA budget hearings, something that resonated with the CEO of a small Wisconsin credit union who told me, They pat themselves on the back for holding themselves to a 6% budget increase this year. Heck, my budget hasn’t increased 6% total in the past three years, maybe longer.

Here are some other interesting tidbits from around the trade show floor and breakout sessions.

Last One Out, Turn Off The Lights

At an open mic session on Tuesday, NCUA board member Rick Metsger pledged allegiance to the dual charter system and described how the agency would be working with an advisory group to make changes in FOM rules to make expansion easier. CUToday had a good pieceon that session.

That piece highlighted but didn’t mention one particularly cogent observation from Dennis Flannigan, president and CEO of Great Basin Federal Credit Union ($130.2M, Reno, NV). It’s no secret that federal to state conversions far outnumber the opposite and Flannigan says Nevada is a good example.

I’m the largest federally chartered credit union in the state, and I’m 130 million, he told the audience. There are six of us left.

Metsger added a little bit of pointed political levity himself when he recommended credit unions send comments to FOMsuggestions@ncua.gov and added, That’s a real, official government email address, in apparent reference to Hillary Clinton’s current travails.

Small And Feisty

The GAC kicked off Sunday with a roundtable for small credit unions that proved to be a spirited session, much of it centered on the NCUA’s new $100 million threshold for being considered a small credit union for regulatory relief purposes.

Despite what would appear to be obvious advantages to that, distrust of the NCUA in general was apparent in the on-the-floor comments from credit union managers. The Credit Union Journalhad a good article on that session, including assurances from the deputy director of the Office of Small Credit Union Initiatives that it feels their pain and would not neglect the needs of the smallest credit unions.

Here’s another news nugget not in that report: That deputy director Martha Ninichuk says the OSCUI will have $2.1 million in grants to distribute this time around, up from the $1 million to $1.2 million Congress has provided it in each of the past few years. And a CUNA lobbyist at the session says this particular Congress may be the most amenable in years to regulatory reform.

As a side note, Fiserv small credit union executive Barb Lowman told me she is hearing resistance to the expected next raising of the small credit union definition to $250 million. Interestingly, she says it’s got a psychological component. I’m hearing people tell me how hard they worked to get to $250 million, and they don’t want to be called small,’ she says.

Can’t Hurt To Try

Larry Fazio, the NCUA’s chief regulator, was on a Tuesday afternoon panel about examiner priorities. Those are, in no particular order: interest rate risk, the new TILA/RESPA disclosures, Ability to Repay/Qualified Mortgage rules, internal controls, new products, changes in strategy, money service businesses, and cyber security.

About the latter, Fazio told the room: Do your best to prevent breaches, be ready to respond if you are breached, and contain and correct those breaches that do occur.

He also encouraged credit unions unhappy with their exam or examiners to take it to the region supervisor. In 2014, 40% of the issues raised with our regional offices were resolved in favor of the credit union, he told the group. It’s a meeting of the minds and it’s a process that does work.

That might be news to fellow panelist Thomas Renz, whose small Ohio credit union was the subject of alleged and egregious examiner retaliation. He appealed as high as he could without going to court, and lost. At Tuesday’s session, Renz sounded a conciliatory note, and did encourage other credit unions to pursue the appeals process whenever they felt wronged.

From Vendor Land

Here’s a news flash: Vendors don’t particularly want to be examined by the NCUA. That’s one of the areas where the agency is seeking expanded regulatory authority.

I asked several technology providers on the trade show floor what they thought of it and each noted that they already are audited frequently and extensively by multiple entities.

Recommended reading: This article Reuters posted Monday titled U.S. Credit Unions Locked In Cyber Battle With Their Regulator.

Meanwhile, myriad payment products were touted by vendors large and small at the GAC, but interestingly, for my part, I saw not a mention of crypto currencies, a hot topic at some other national payments confabs.

In three days here, I never heard bitcoin mentioned. Maybe, as my CreditUnions.com colleague Erik Payne says, No one knows how to talk about it yet.

Sharing Success Stories

The best part of the GAC for me was talking to credit union executives about initiatives they have underway, using proven best business practices and processes to better serve consumers as valued customers and as member-owners.

We’ll be featuring their stories at CreditUnions.com in the months ahead.

March 11, 2015

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