Regulation-by-enforcement is unethical and not permitted at NCUA.
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. Using a settlement to create policy is regulation-by-enforcement, hence phrases like “we rely on case law” are only appropriate when referring to matters decided by a court.
- 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 how agency employees treat regulated entities compared to how agency employees expect to be treated the agency itself. 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.
If NCUA 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.