For the past seven years, the world's top credit union regulators have gathered behind closed doors to discuss regulatory challenges and solutions. Grace, who serves as moderator, has been the only non-regulator present. He said the lack of industry trade organizations and press, along with a strong rapport built among participants over the past seven years, allows the group to speak freely and openly, and engage in productive give-and-take dialogue.
This year's roundtable included representatives from the International Accounting Standards Board and BASEL, who participated in discussions about new global standards.
"We've heard an awful lot about stress testing for banks; well, those parameters are international," Grace said. "It's all leading toward a greater internationalization of rules, standards and regulation."
Although most American credit unions don't do business internationally, Grace said the U.S. government has already agreed to abide by international accounting standards, which includes the NCUA.
Andy Poprawa, president/CEO of the Deposit Insurance Corporation of Toronto, is also a member of the group's steering committee. The attendee said the group also discussed the sustainability of the credit union business model.
Just like U.S.-based credit unions, financial cooperatives worldwide are struggling to survive on the traditional margin between member loans and deposits. And, like in the U.S., most are attempting to make up the difference by minimizing expenses and finding additional sources of revenue.
Poprawa said wealth management services are providing "reasonable returns;" and, although it goes against traditional credit union philosophy, service charges are another solution gaining in popularity.
"Some people in the credit union movement will say we are looking like banks and moving away from the credit union philosophy, but frankly, I don't think we have much choice," Poprawa said. "We can't say we live in a different world; credit union members are consumers, and they will shop around for the best deal."
Toronto's top credit union regulator said his peers were also critical of mergers as a profitability solution, saying that unless two credit unions have well-matched fields of membership, often in reality, mergers don't improve profitability or benefit members.
Regulators also discussed risk management, the consolidation of financial services regulatory bodies, and how credit unions will conform to international accounting standards.
NASCUS Chairman George Reynolds represented the U.S. in this year's event. The NCUA usually sends a board member and the agency's executive director to the event but did not this year.