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Our weekly blog addresses issues and topics of interest for Montana credit union board members. 

The Cost of Regulatory Burden

by Donya Parrish, MCUN

Our national association, CUNA, will release a study this week showing what most of us in the industry knew -- regulatory burden is expensive! The overall “cost” of the regulatory financial impact that resulted from the financial crisis was estimated to be $7.2 billion. Yes, billion with a “b”… Wow! That is further broken down into $6.1 billion of regulatory cost and $1.1 billion of lost revenue.

Why is this significant?

As credit unions and your trade associations have long told lawmakers, credit unions were not reckless; you did not cause the economic crisis, but you have paid dearly in trying to comply with all the regulation that resulted from it. You likely know best how all the new rules and regulations have directly impacted your own credit union -- whether it meant having to hire a compliance officer, ramp up the training budget, decide against opening a branch office or starting a service members have longed for, or maybe even merging a small credit union when you felt it was no longer feasible to keep up.

All of those scenarios describe a very real cost of impact. The study also reveals a telling picture that credit union CEOs paint of how they would have allocated funds if they had not been forced to spend them on regulation. Some of the larger categories include Enhanced Alternative Channels, Build Capital, Better Loan Rates, Staff Development, and Better Deposit Rates. Those are true sacrifices!

Later this month, a large contingency of credit union advocates will descend on Washington D. C. for the Governmental Affairs Conference. On our Hill visits, we will discuss the results of this study and share numbers for estimated burden to Montana credit unions. While we know laws won’t change overnight to reduce your regulatory burden, we need to deliver the important message that as “good guys” who are focused on helping members, the real cost of this burden is to your community members.

So, thank you all for your dedication and perseverance through the financial crisis. It was not your imagination that it has resulted in strain to staff time and pressure on your bottom line. But, having hard data to use in advocacy efforts should help us spread the message that reducing regulatory burden is a top priority.

Donya Parrish is the VP-Advocacy for the Montana Credit Union Network. She would welcome any questions or comments on this material. You can email Donya or call her at 406-324-7374.

Resources

The Impact of Regulatory Burden (presentation by Bill Hampel, January 12, 2016)

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