FARMERS BRANCH, Texas (8/20/10)--The Texas Credit Union League (TCUL) has sent a comment letter on proposed rules about recommended new fees and proposed revisions to loan rules from the Texas Credit Union Department (TCUD) that the league says will deplete credit union capital. The league noted its opposition by citing concerns that the proposed fees are “punitive and will deplete credit unions of capital when they need it most.” It also said that several of the changes in the proposed loan rules are subjective, leaving credit unions exposed to interpretation, rather than offering a clearly defined procedure (LoneStar Leaguer
Aug. 19). The new fees are proposed in 97.115. Reimbursement of Expenses for Legal Services and 97.116. Recovery of Cost for Extraordinary Services. Both of the proposed rules would allow the regulator to charge new and additional fees, on an individual basis, to credit unions for:
* Reimbursement of legal expenses from the attorney general, and * A decision by the Commissioner of Credit Unions to send examiners into a credit union beyond the regularly scheduled exam.
TCUL cited key concerns in the comment letter:
* The proposed rules take away predictability as to the cost of regulation; * The fees would have a disproportionate impact on small and mid-size credit unions; and * The penalty fees are unlimited and would be completely at the discretion of the credit union commissioner.
TCUL noted that the proposed rules do not eliminate burdens on credit unions or provide new authority. Rather they add unnecessarily subjective language. Such broad language leaves credit unions vulnerable to interpretation during the exam process, the league said. The feedback from credit unions indicated they prefer the existing loan regulations, TCUL added. “This has traditionally been covered as part of the TCUD budget through the regular assessment made on credit unions for operations at the TCUD,” Jeff Huffman, league vice president for government relations, said in an e-mail to News Now
in July. “The system of funding the agency that has been in place for many years has served Texas credit unions well, in good times and bad. “This proposed rule further expands the power of the regulator, giving great discretion to the commissioner. It takes away predictability of regulatory costs for state-chartered credit unions,” he added (News Now
July 9). “If these types of rules are implemented, state charters in Texas will not only have to pay their regular assessments, but will also be faced with individual assessments from the TCUD when they are least able to afford additional unanticipated and unlimited regulatory costs,” Huffman said. The Credit Union Commission will consider the proposed rule changes Oct. 15.