Calls Blanket Move Potentially Harmful to Credit Union System
(April 1, 2008, New York, NY) A new proposal issued by the U.S. Treasury Department on March 31 contemplates the merger of financial regulators of depository institutions, and would effectively end NCUA’s existence as a separate and distinct oversight body for credit unions.
Federation President / CEO Cliff Rosenthal called the proposal a blanket move that ignored the real differences between credit unions and other financial institutions. “Merging NCUA with other financial regulators is unwarranted and potentially harmful to the entire credit union system,” he said.
“While there have been isolated problems with credit unions over the last year or two, they have very little to do with the current economic downturn and subprime mortgage crisis,” Rosenthal said. “Overwhelmingly, credit unions maintain a conservative, consumer-friendly book of business. They are a vital part of redressing the economic wounds inflicted by largely unregulated, profit-maximizing financial institutions.”
Rosenthal recommends a different approach for credit unions. “Rather than putting the cooperative financial system at risk through a wholesale overhaul of the regulatory structure,” he said, “policymakers should look for ways to strengthen the credit union system and facilitate its expansion, while increasing oversight of the institutions responsible for the collapse in the housing markets.”
© 2008 National Federation of Community Development Credit Unions.