WASHINGTON (12/7/11)--The Federal Reserve Board has made special efforts to identify and minimize the regulatory burden faced by credit unions and other small financial institutions, and assesses the potential impact that rules could have on small businesses, small governmental jurisdictions, and small organizations, as it implements rules under the Dodd-Frank Wall Street Reform Act, Fed Governor Daniel Tarullo testified on Tuesday.
Tarullo said the Fed has established a subcommittee of regulatory and supervisory oversight committee members "for the express purpose of reviewing all regulatory matters" from the perspective of credit unions and other small, community-based financial institutions. The reviews undertaken by this group "are intended to find ways to reduce the burden on community depository organizations arising from our regulatory policies without reducing the effectiveness of those policies in improving the safety and soundness of depository organizations of all sizes," he said.
The Fed's Community Depository Institutions Advisory Council (CDIAC) is also helping to address the needs of small financial institutions, Tarullo noted. The CDIAC has 12 separate district bank-based councils, and chairmen from each of these 12 councils serves on the Feds larger CDIAC, which meets twice a year in Washington, D.C. That group provides the Fed with input on the economy, lending conditions, and other issues. A number of credit union representatives serve on these councils.
Overall, the Fed governor testified, the Fed has issued 29 final rules, public notices, and reports, and has begun work on another 13 related rules. The Fed is expected to issue approximately 60 sets of rules and formal guidelines as part of its implementation efforts, and the Fed is "working diligently to complete the remaining rules," he added.
The Fed is trying to make its rulemaking process "as fair and transparent as possible, with ample opportunity for the public to comment," and is specifically seeking public comment on the costs and benefits of proposed rulemaking approaches, and what, if any, alternative approaches could be used.
Tarullo testified at a Senate Banking Committee hearing on the "Continued Oversight on the Implementation of the Wall Street Reform Act." Deputy Treasury Secretary Neal Wolin, Securities and Exchange Commission Chairman Mary Schapiro, Commodity Futures Trading Commission Chairman Gary Gensler, Federal Deposit Insurance Corp. (FDIC) Chairman Martin Gruenberg, and acting Comptroller of the Currency John Walsh also testified during the hearing.
While the Credit Union National Association (CUNA) commends the objectives of the efforts referenced by Tarullo referenced, CUNA underscores that credit unions are overwhelmed by regulations with which they must comply, but which address problems credit unions generally weren't involved in.
Many of the regulations affecting credit unions that the Fed used to oversee have now been transferred to the Consumer Financial Protection Bureau, which has approached its responsibilities so far by reaching out to credit unions and other stakeholders before developing regulations. CUNA said it encourages the Fed to utilize this approach to a greater extent when fine tuning rules that will remain under its jurisdiction, such as Regulation D, which covers monetary control reserve requirements for transaction accounts, and provisions of Regulation E, Electronic Fund Transfer Act, which covers debit card interchange regulations.
CUNA will be following up with the Fed to pursue regulatory changes under that agency's authority that will benefit credit unions.
For more on the hearing, use the resource link.