Wisconsin credit unions shouldered $161 million in regulatory costs in just 2014 - limiting resources that could have been used to better serve their 2.6 million members. Nationwide the industry spent a staggering $7.2 billion to comply with growing and often unnecessary regulation. The upside is that this data can fuel advocacy efforts to reverse regulatory overreach.
Regulatory costs in Wisconsin
For Wisconsin and in 2014 alone, the burden of regulation poses an annual cost of:
- $133.8 million, statewide, in direct costs to comply.
- $28.1 million in reduced revenue, statewide, from not being able to invest resources on member service (see graphic, right).
- $62 in total impact per member in our state.
The same year, Wisconsin credit unions still delivered $104.6 million in savings to members through lower interest on loans, lower and fewer fees and higher interest in savings.
The national impact
Nationally, total regulatory costs represent:
- 60% of the $12 billion in member-benefits that credit unions as an industry returned to 106 million members in 2014.
- 48% of non-interest income.
- 80% of net income.
Regulatory costs divert funds away from these purposes
Why it matters
Regulatory costs are considered a partial driver of industry consolidation. For example, in 1960, there were over 700 credit unions in Wisconsin. That number shrunk by half over four decades, but in just the most recent decade - largely prompted by the federal regulatory reforms - that number shrank dramatically to just over 150 credit unions.
"Every dollar spent to comply with burdensome regulations is money that credit unions can't spend to serve members," said League President & CEO Brett Thompson. "These costs threaten each credit union's ability to provide competitive rates on loans and savings, to retain quality staff, to offer free services like financial counseling and more."
Regulatory compliance is particularly crippling for smaller institutions. Growing costs force institutions to consider ending certain services, increasing fees or deciding not to introduce certain services - difficult decisions for credit unions, which as an industry focus on delivering superior value to their member-owners.
By quantifying regulatory burden, we've been able to convey to Congress and others this crippling impact as well as gain allies willing to scrutinize the efficiency of regulations and regulatory agencies and work toward greater accountability.
Wisconsin's Members of Congress joined one such effort recently, signing on to a letter to the Consumer Financial Protection Bureau (CFPB), urging it to exempt credit unions from onerous rules and better tailor the rules they do make to mitigate the damage.
Wisconsin credit unions are urged to send representatives to the Hike the Hill event in Washington, D.C. this fall to continue this dialog. Credit union staff and directors can sign up as Activists to stay informed and advocate on these and other policy issues.
Resources to help you advocate
An executive summary of the reg burden study Detailed report of the findings Regulatory burden calculator (tally the specific impact on your credit union) State-by-state impact estimates A leave-behind (1 page flyer for visits with policymakers) Presentation (slides from the CUNA Governmental Affairs Conference)
The Unite for Good effort is an internal growth strategy developed by CUNA in conjunction with its Board, state leagues, credit unions and system partners. The plan's action steps – to remove barriers, increase awareness and foster service excellence–are aimed at helping more credit unions become their members' primary financial institution by compelling members to see credit unions as their best financial partner. Read more articles in our Unite for Good series.