CHARLESTON, W.Va. – Peoples FCU CEO Tom Brewer on Monday told a congressional panel the growing number of regulations – especially the torrent of rules that continue to result from the Dodd-Frank Act – are burying credit unions under a massive compliance burden that is particularly damaging to smaller credit unions.

“Most of the costs of compliance do not vary by size and, therefore, are proportionately a much greater burden for smaller institutions,” Brewer said during his testimony before the House Financial Services Subcommittee on Financial Institutions during a field hearing in Subcommittee Chairwoman Shelley Moore Capito’s home state. “If a smaller credit union offers a particular service, it has to be concerned about complying with most of the same rules as a larger institution, but can only spread those costs over a much smaller volume of business.”

With $93.7-million in assets, Peoples FCU employs 29 full-time employees, one of whom is devoted full-time to compliance issues.

“With a relatively small staff, having someone devoted full-time to compliance is a considerable financial burden and was unheard of only a few years ago,” Brewer related. “It diverts resources from direct member service, such as from the teller line or from the loan department or from financial counseling.”

But the smaller the credit union, the tougher it gets, he added, noting that roughly 50% of the 100 credit unions in West Virginia have less than $10 million in assets. “Many of these have only one or two full-time employees who manage all aspects of the operation with guidance from their volunteer board,” Brewer said. “Not surprisingly, smaller credit unions consistently say that their No. 1 concern is regulatory burden.”


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