Just How Much Is Compliance Costing Your Credit Union?

March 19, 2014 at 8:44 am 2 comments

A recent survey compiled by George Mason University provides the most detailed evidence I’ve seen of how much increased compliance responsibilities are imposing financial burdens on small lending institutions.  Although the survey just included banks with assets of $10 billion or less, the results are consistent with what we’ve all been hearing anecdotally about the impact Dodd-Frank is having on credit union budgets.

For example, in the aftermath of Dodd-Frank, most of these banks have:

  • hired an additional compliance person;
  • changed their mortgage lending offerings as a result of QM regulations in the case of 60% of respondents; and
  • experienced an increase in their annual compliance cost at a rate of at least 5% since 2010.

Another statistic that I found interesting was that 65% of the respondents feel that Dodd-Frank is now more burdensome to comply with than the dreaded Bank Secrecy Act.

What can we make of these survey results beyond the fact that it is a great time to be in compliance?  The researchers point out that increased compliance costs are an inevitable result of Dodd-Frank.  Even though the statute was intended to address practices of larger banks, small banks can’t spread out the cost of new compliance mandates over as many employees.  I know many of you did not go into the business to deal with compliance officers all day and you view the increased regulatory burden as a distraction from the core goals of your credit union.

Conversely, since I started working with compliance issues about seven years ago, I have always been of the opinion that some credit unions have underinvested in compliance.  To the extent that Dodd-Frank has forced those credit unions to devote more staff and time to compliance, this is not a bad thing..  the better your compliance staff the more efficient your operations will be and that will positively impact your bottom line.

Entry filed under: Advocacy, Compliance, Regulatory. Tags: , , .

How Does The CFPB Figure Out Who’s Violating The Law, Anyway? Credit Unions Score Major Victory

2 Comments Add your own

  • 1. Anonymous  |  March 20, 2014 at 9:44 am

    I do agree that compliance has added significant costs to our operating structure. I don’t however feel that we have seen any
    measurable return in operational efficiency, at least in safety and soundness and ROA where it counts.


  • 2. jodelecerdere@yahoo.com  |  March 26, 2014 at 1:15 pm

    If you are able to master an academic tone inside your writing, you happen to be clearly showing your understanding of this new field you might be entering along with your studies, the concept of academia. You take your nucleus word or phrase and write it within the middle of your page, drawing a circle around it.


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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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