Compliance Blog

Written by Carrie Hunt, General Counsel and VP of Regulatory Affairs

NCUA’s Chairman Debbie Matz wrote President Obama yesterday in response to his Executive Order to ensure that agencies design cost-effective regulations to promote economic growth and job creation.  In the statement Chairman Matz put out she said the following:

“I am pleased to report that NCUA already meets or exceeds the key principles of the Executive Order,” Chairman Matz wrote in response to Executive Order 13579: Regulation and Independent Regulatory Agencies. “NCUA has an exemplary record of balancing prudent safety and soundness rules with responsible regulatory relief. NCUA remains committed to ensuring regulations are reasonable, innovative, and cost-effective, and to encouraging robust public participation in the rulemaking process.”

Most of the reading audience can hazard a guess as to whether I agree with that self-assessment on the part of NCUA. 

The statement Chairman Matz put out goes on further to state that the agency furthers these goals by:

• Conducting regular reviews of all rules in a publicly disclosed three-year rotation;
• Inviting public participation through pre-decisional meetings, town halls, webinars, videos, and written communications;
• Facilitating coordination with other federal financial regulators and state credit union supervisors to ensure best practices in rulemaking;
• Modernizing existing rules and targeting new rules to minimize compliance costs; and
• Integrating publicly available financial data to support rule changes.

Targeting new rules to minimize compliance costs?  How?  When is this happening? What does this even mean?  Every new rule has an additional compliance burden.  But I digress.

Instead of a fourteen page PR piece about what NCUA does so well now, I would have liked to have seen some more soul searching on the part of our regulator and a response that focused more on what the agency could do better.  If you make it to the end of the long missive to the President, you will see that NCUA has attached its IRPS 87-2 that outlines its policy on regulation.  The IRPS was amended in 2003 to some extent, but  I swear I can still see streaks from a mimeograph if I squint hard enough.  Every time NCUA promulgates a rule it does a Regulatory Flexibility analysis if the rule would have a significant economic impact on small entities.  This is the real problem here- this is the analysis on the part of rulemaking that needs to be changed- that and the Paperwork Reduction Act requirements.  Under the existing regime, NCUA (and other regulators) do some sort of analysis on burden and then the rule is put out for comments.  At the outset , the commenter is put on the defense and is in the position of having to try to counteract or support that analysis without any benefit of real world experience.  After a rule is finalized there is never an opportunity to reopen that analysis and have a real discussion about burden.  In my opinion,  better cost-benefit analysis needs to be implemented across the board in any regulatory  regime. And the impact of regulations need to considered overall as a package, instead of looking at individual rules in a vacuum.

Chairman Matz has stated some very positive goals for NCUA rulemaking.  Measuring success however, is a much more difficult proposition, and this is where I think NCUA still has to improve.

The full 14-page letter can be found here.  

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For the first time in five years I am not travelling up to Boston for Thanksgiving.  I cannot contain my excitement at not having to sit in traffic.  Two years ago I left Arlington at 3 pm and at 10 pm, I WAS JUST NORTH OF BALTIMORE.  For those of you who are unfamiliar, that portion of the trip usually takes about an hour.  But again, I am getting off topic.  Regardless of whether I am at home for Thanksgiving or not, every year I make cranberry sauce to mark the season.  After a few days, I tire of eating it so I end up seeing how long the leftover sauce lasts in the fridge before it gets moldy.  This year it made it through Halloween.   Still tasted fine.