ALEXANDRIA, Va. –NCUA Chairman Kyle S. Hauptman has issued a statement on NCUA’s No Regulation-by-Enforcement Policy, saying it’s important to “put in writing a policy of fairness.”
“Today’s policy statement fulfills a goal I listed back in January upon being designated as chairman,” Hauptman said in the statement, referring to that earlier statement in which he said, “Codifying our procedures to protect Americans from regulation-by-enforcement. For example, no enforcement action should ever set―or even clarify―policy. In America and other free societies, the sequence is: set speed limits, then give speeding tickets (no one has any obligation to be aware of someone else’s ticket).”
Hauptman said he wanted to be clear that NCUA has a “good track record” related to regulation-by-enforcement, and this his statement is not the result of any recent actions taken by the agency.
‘Millions Share the Frustration’
“After all, it’s counterproductive for a deposit insurer to engage in regulation-by-enforcement against the same institutions we insure. That said, it’s important to put in writing a policy of fairness, whereby government employees give regulated credit unions the same due-process that they, under civil servant protections, rightly expect in their own careers,” Hauptman said in his statement “Today’s statement is born partly of my frustrating interactions with regulators, both in my time on Capitol Hill and in the private sector. I know that millions of others share the frustration of being told ‘if you want to figure out the rules, look at our prior settlements.’ Americans expect better from their government, including financial regulators.”
No Regulation-by-Enforcement Policy Statement
In its statement, NCUA said regulation-by-enforcement is “unethical and not permitted at NCUA.”
It further stated:
- Enforcement actions shall only occur in the case of clear and significant violations of law or regulation. Therefore, no person or entity regulated by NCUA has any obligation to be aware of any prior NCUA enforcement actions because no new policy is ever set via an enforcement action.
- No enforcement action, nor the timing of enforcement actions, shall be motivated by trying to boost the agency’s enforcement totals or get the enforcement done in a certain fiscal or calendar year.
- Enforcement is a necessary tool, but is not, by itself, an accomplishment or a metric of success. Our goal is for credit unions to operate safely and soundly and in compliance with applicable laws and regulations. We will seek to remedy any such problems whenever we can without needing to use enforcement action. The goal is to resolve any problems, not to issue press releases, rack up enforcement numbers or improve the post-NCUA career options of agency staff. We don’t set “speed traps” to increase enforcement totals.
- A guiding principle here is avoiding double-standards. In their own careers, civil servants are protected against arbitrarily poor performance reviews, allegations of misconduct, wrongful termination and other things that could harm their career path. In turn, government employees must extend the same due process protections to those they regulate.
The Next Step
In the statement, the agency further said that if it “finds a harmful practice that threatens our mission or is otherwise injurious or abusive, and it is not currently addressed by law or regulation, then our next step is to consider rulemaking or other remedy. As is the norm in America, the sequence of events at NCUA is: 1) publish rules, 2) then (and only then) enforce them.”
America’s Credit Unions Responds
“America’s Credit Unions thanks Chairman Hauptman for his commitment to clear, fair regulation and supervision of the credit union industry,” America’s Credit Unions President and CEO Jim Nussle said in a statement. “We have long raised concerns about ‘regulation by enforcement’ and the uncertainty and burdens that approach adds to credit unions’ compliance efforts. Official processes for rulemaking and guidance ensure transparency and well-defined expectations between regulators and covered institutions. We look forward to continuing to work with Chairman Hauptman and the NCUA to bring meaningful regulatory relief to credit unions.”
Defense Credit Union Council Responds
“We at DCUC commend Chairman Hauptman for reinforcing the principle that credit unions should be regulated based on clear rules and consistent standards,” said Anthony Hernandez, DCUC President/CEO. “This approach ensures that credit unions can operate safely and soundly, while protecting the rights of their members and maintaining trust in the system.”
Jason Stverak, DCUC Chief Advocacy Officer, echoed these remarks, adding, “We applaud both Chairman Hauptman and the NCUA for its continued focus on clarity, due process, and responsible oversight. These values are integral to the health and stability of the credit union system.”
