Credit unions respond to OMB request for cost/benefit of regulations

<p>WASHINGTON-CUNA and NAFCU are taking the opportunity to write a comment letter to the Office of Management and Budget (OMB) in response to its request for comment on a draft report for Congress regarding the costs and benefits of federal regulations. The assessment by OMB is under the auspices of the Regulatory Right to Know Act. Comments were due May 28 to OMB. “OMB is calling for public nominations of regulatory reforms to specific existing regulations that, if adopted, would increase overall net benefits to the public, considering both qualitative and quantitative factors,” NAFCU President and CEO Fred Becker wrote. “This provides an excellent opportunity for the federal credit union community to comment upon some of the areas that are in particular need of reevaluation.” NAFCU’s recommendations included: expanding the definition of “electronic address” to include Website electronic addresses other than e-mail accounts for Regulations B, E, M, and Z promulgated by the Federal Reserve and NCUA’s Truth in Savings rule, among other items; broadening the 10-day delay in account disclosures under Reg Z and NCUA’s Truth in Savings when the consumer is not present when the account is opened to cover accounts opened vial mail, telephone, or fax; eliminating from a proposed Fed Reg C the requirement that lenders request data on race, ethnicity, and sex when the consumer applies entirely over the telephone; rescinding the requirement under Reg C to report the annual percentage rate spread on home related loans; and undertaking a comprehensive study on Regulation D provisions that are “inconsistent and complicated,” such as the definitions of `restricted withdrawals’ and `unlimited withdrawals.’ These items are entirely different from the approach CUNA is taking, CUNA Associate General Counsel Mary Dunn explained. “We’ve taken a different tact that I see others have taken,” she said. CUNA seized this opportunity to make more sweeping suggestions. The most important one, Dunn said, was the Fed’s Reg D requiring financial institutions to hold reserves with the Fed that the agency does not pay interest on. She explained that the regulation was created in 1980 for monetary control purposes, but financial institutions are way beyond the troubles of the 1980′s now. CUNA had made the same remarks in an earlier meeting with Fed Vice Chairman Roger Ferguson. Another broad-brush change CUNA is asking for is to scale back some of the consumer protection regulations, like Truth in Lending and others. Dunn pointed out that while CUNA has gone on the record in support of nearly all of them, enough is enough. “We really have to say time out,” Dunn said. She explained that each small portion of the consumer protection regulations have added up and compounded until it is getting to be too much. CUNA also recommended that the Small Business Administration (SBA) guidance limiting credit union participation in its 7(a) lending program be eliminated. SBA lending is becoming a critical issue for credit unions involved in business lending and bumping up against the 12.25% of assets cap. Dunn summed up, “This does have a real significance that goes beyond a few changes in a few regs to the overall regulatory landscape.” For example, she said, if a regulator claims that an institution can complete a particular form in about an hour, they have to prove that. [email protected]</p>