In The Incredibles, a computer-animated villain uses weapons to slow down and stymie the lovable Mr. Incredible.
One of the most memorable is a bank of cannon that fires heavy, sticky blobs. When one blob lands on the hero, it hardly slows him down. Several in a row become a sticky annoyance but once the heavy pelting begins, he's immobilized.
According to the Filene Research Institute's newest study, Only Up: Regulatory Burden and Its Effects on Credit Unions, the flurry of new and revised regulations have created a similarly sticky annoyance for credit unions in both the United States and Canada.
Because compliance has a high fixed cost component, this new regulatory regime seems to be generating artificial economies of scale. The research revealed a very strong negative relationship between the size of a credit union and the relative intensity of its regulatory compliance costs.
Canadian credit unions in the largest quartile bore one-fifth of the comparable costs of those in the smallest quartile. In the U.S., those in the largest quartile bore just one-tenth of the regulatory compliance costs borne by those in the smallest quartile.
The study's authors estimated that between 2007 and 2012, the number of full-time equivalents devoted to regulatory compliance increased on average by 70% in the U.S. and by 94% in Canada.
Measuring regulatory burden is like identifying sticky blobs. The second step is ensuring the best outcome for consumers require treating organizations with different characteristics in different ways.
George Hofheimer is the chief research and innovation officer at the Filene Research Institute. He can be reached at 608-852-4632 or [email protected].
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