Noting that his agency has a good track record in this area, the chairman of the federal credit union regulator on Wednesday nevertheless issued a “no-regulation-by-enforcement” policy that he said fulfills a goal he listed in January upon being designated chairman.
“To be clear, this agency has a good track record regarding regulation-by-enforcement, so this statement shouldn’t be viewed as being the result of any recent NCUA actions,” said Kyle Hauptman, chairman of the National Credit Union Administration (NCUA) Board, in a statement. “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 also shared that his policy statement “is born partly of my frustrating interactions with regulators, both in my time on Capitol Hill and in the private sector.”
The policy statement is prefaced with a brief statement that regulation-by-enforcement “is unethical and not permitted at NCUA.” It includes the following four points:
- 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.
Hauptman, a Republican, is currently the only sitting member of the agency board. The two other confirmed board members, Democrats Todd Harper and Tanya Otsuka, are suing to regain the seats they were forced out of by the White House in April, reportedly without cause.
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