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How to Impact Regulatory Change

by Justin hupfer

Screen Shot 2014-11-25 at 4.01.36 PMIt’s that time of the year when industry veterans and Washington insiders start to predict what action the next Congress may take that could impact credit unions. Given the relative inactivity of Congress over the past twelve months, we may be wise to be cautious if we’re predicting much of a change from the status quo.

That said, as the volume of regulatory activity from the Consumer Financial Protection Bureau (CFPB) has increased in recent years, credit unions would be wise to pay attention to regulators’ upcoming agendas.

My initial thought in writing this column was to do some looking ahead—largely relative to what’s likely to be coming down the pike next year from the CFPB and National Credit Union Administration (NCUA). As I started putting my thoughts together, however, I found myself thinking more about the dichotomy of a stagnant Congress and the active regulatory agencies.

After passing Dodd-Frank in 2010, Congress has not done much substantively meaningful for credit unions in the past four years. Meanwhile, regulatory activity—much of it required due to Dodd-Frank—is creating pain points for credit unions in ways regulators may not fully appreciate.

Our firm, PolicyWorks, provides the legislative and regulatory advocacy services for the Iowa Credit Union League. As such, we are involved with the Iowa League’s state and federal advocacy efforts—both legislative and regulatory. I haven’t heard our Iowa credit union CEOs complain much about “pain” from Congress in the past several years, but nearly all of them speak to the Screen Shot 2014-11-25 at 4.02.04 PMregulatory burden. As such, we had as many talking points for our regulatory meetings at our “Hike the Hill” trip to D.C. this fall as we did policy items to visit about with our congressional delegation.

The Credit Union National Association (CUNA) and state leagues have, for decades, been very strategic about state and federal lobbying efforts and how to use financial and grassroots resources to impact elections. I know those same groups are starting to create more focus and action around how to impact regulatory activity. This was evident with CUNA’s activity this year around the risk-based capital proposal. 

Having spent many years representing the interests of the Iowa Credit Union League and other associations and organizations before the Iowa legislature, I’m familiar with what we do in Iowa to advocate for legislative and congressional priorities.  In our state, we probably haven’t put the same level of focus on regulatory advocacy.  Why not? Perhaps it is because the pace of regulatory activity in the past two to three years is so much different than the prior twenty-five years. The impact of regulatory activity has become so much more apparent recently that we are now spending more time thinking about how to impact change Screen Shot 2014-11-25 at 4.02.25 PMin that area.

Should we view regulatory advocacy more like our legislative and congressional advocacy? And if so, what could that mean?

What follows are five ways we, as an industry, can employ traditional lobbying tactics to influence the regulatory climate.   

1. Draw the Distinction

Let’s educate regulators like we do legislators and their staff. Let’s not assume all regulators/staff know the difference between credit unions and other financial institutions. If we don’t educate, it is more difficult to expect agencies like the CFPB to treat credit unions different from $50 billion dollar banks.

2. Position Educated Regulators

Can we recruit “candidates” to “run” for regulatory positions? This certainly wouldn’t be the same as having a state legislator that could actively advocate for credit unions.  However, it’s better to be talking about regulatory issues with someone that understands credit unions, may have relationships with our industry and isn’t a former bank executive.

3. Advocate Regulation Like Legislation

Inform credit union members on meaningful regulatory activity. We educate regulators on issues we care about, have honest dialogue and then they make a decision and write rules. It’s similar to the legislative process in some ways. If we feel the regulators’ decision negatively impacts our ability to best serve members, shouldn’t we communicate the decision and resulting impact to our credit unions (and their members) via newsletters, social media, etc.?

4. Communicate Gratitude

Let’s thank regulators when they listen to credit unions’ input. Very similar to the actions in number three above—let’s share with credit unions those instances when regulatory bodies have listened to our concerns and made changes.

5. Get on the Agenda

Let’s have a proactive regulatory agenda aimed at repealing/amending regulations that are unduly burdensome or outdated—and advocate for the repeal over a period of time just as we do congressional priorities. Too often, it feels like we don’t identify what we would like to be repealed or amended; instead, we spend time responding to new proposals. 

These aren’t new conversations, and some may push our comfort level a bit more than others. Yet, we all know the regulatory agendas are increasingly complex and meaningful to credit unions. We should continue to build state and federal advocacy strategies of equal importance.

Justin Hupfer is CEO of PolicyWorks, a national leader of credit union compliance solutions. He can be reached at justinh@policyworksllc.com.

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