WASHINGTON — Credit union trade groups are applauding new legislation that would require banking agencies to review Dodd-Frank Act rules as part of a mandated process to assess the relevance of financial rules.
Regulators have moved into the second phase of their pending review — required every 10 years under the 1996 Economic Growth and Regulatory Paperwork Reduction Act — to identify "outdated, unnecessary or unduly burdensome" rules. But critics have raised concerns that the review plan — announced in June — may leave out Dodd-Frank rules, included those drafted by the Consumer Financial Protection Bureau. The consumer agency was created by the 2010 law.
The new bill, introduced by Sen. Mike Crapo, R-Idaho, would require that CFPB and other Dodd-Frank regulations be included as part of the review, although the CFPB is separately required to review its major rules five years after they go into effect. The National Credit Union Administration would also be required to participate. The credit union agency completed a review a decade ago and has said it will again, but it is not required by EGRPRA to do so.
Brad Thaler, VP of legislative affairs at NAFCU, credited Crapo's recognition of the regulatory burden CUs face.
"While we are pleased that NCUA has shown leadership in voluntarily participating in the EGRPRA process, we believe requiring review of all existing regulations form financial regulators, especially NCUA and CFPB, as this legislation would do, will help in preventing costly, unnecessary or duplicative rules and help credit unions thrive," Thaler said in a statement.
CUNA's Chief Advocacy Officer Ryan Donovan called Crapo "a champion for reducing regulatory burden for credit unions."
"Ensuring that the CFPB looks at its regulations with an eye toward reducing regulatory burden has been a priority for CUNA from the beginning, and this legislation is a step in that direction," Donovan said in a statement.
In a letter to NCUA last week, CUNA also urged NCUA to improve its own review process to better align it with EGRPRA.
"Supporting two simultaneous regulatory reviews is confusing to credit unions and takes NCUA staff time that could be better spent drafting rules that reduce the regulatory burden," CUNA's senior director of advocacy and counsel J. Lance Noggle wrote in a letter addressed to NCUA's secretary of the board.
Only Meaningful With Real Solutions'
In a press release, Sen. Crapo said that "Rather than predetermine which rules should or should not be reviewed, this legislation will require the federal financial regulators to review all existing regulations, including Dodd-Frank and CFPB rules. Crushed under an ever-increasing regulatory burden, this review is only meaningful if we identify the biggest challenges for community banks and credit unions and provide real solutions."
The legislation would also expand the scope of the review to include rules that impact all financial institutions, not just insured depository institutions.
Lawmakers raised the issue of excluding Dodd-Frank and CFPB rules at a regulatory reform hearing last month, but regulators pushed back, noting that many Dodd-Frank rules are still being put into effect.
"Given that the EGRPRA process is looking at established rules that are outdated and overly burdensome and unnecessary, most of the Dodd-Frank rules that the OCC has been responsible for haven't been implemented yet or haven't taken effect, so it's not, we feel, appropriate to look at those rules at this time," Toney Bland, senior deputy comptroller for midsize and community bank supervision at the Office of the Comptroller of the Currency, said at the Feb. 10 hearing.
--Credit Union Journal reporter Aaron Passman contributed to this report.