G-20 Regulations Could Affect CUs
"Oftentimes we see policymakers at this level thinking only, or exclusively, about large, commercial banks," Grace said. "Frequently, they are from that sector. And asset-wise, these are the largest entities, so that's often where the focus is."
G-20 participants include the top central bankers, finance chiefs and heads of state of the world's 19 largest economies and the European Union. Collectively, they represent 621 million financial cooperative members, with China and India both eclipsing the United States' 88.5 million credit union members with 200 million members each.
Grace said G-20 leaders will be discussing financial standards and rules that will be set at a global level and will be followed by federal regulators in many countries, including the U.S.
"That's what's so important about this meeting later this week," Grace said. "The rules they'll make there, they'll be setting them for many types of financial institutions, and they'll be in effect for a long time. That's why we've been working for months to try to get ahead of this train."
Ever since the G-20's financial supervision work group was created last November, WOCCU has been in contact with the group, which has tasked with enhancing sound regulation and increasing and strengthening transparency. WOCCU sent a formal letter addressed to the group's co-chairs that outline the role of credit unions and their supervisory structures, and Grace said WOCCU was assured by the group's World Bank representative that "credit unions are not within the scope of the regulatory review."
However, Bloomberg reported March 30 that President Obama and U.K. Prime Minister Gordon Brown "aim to merge their national blueprints for strengthened regulation into a united front to rein in hedge funds, derivatives trading, executive pay and excessive risk-taking by financial firms."
"We weren't the cause of current crisis and we don't want to be on the receiving end of inappropriate regulatory backlash," Grace said. "That's true in all of the G-20 countries, including the U.S."
WOCCU has already scheduled an April 15 meeting with Basel Committee Chairman Nout Wellink to discuss what Grace called a "concerning trend" of macro financial supervision and new rules that will emerge from last Thursday's G-20 meeting.
"I think it's important and key that credit unions have their own independent regulators that truly understand their structure and differences from retail banks, as well as their similarities," he said.