Mandating that credit unions pay into a fund aimed at rescuing large financial institutions isn't equitable and would hurt credit union members, NCUA Chairman Debbie Matz wrote in a letter to House Financial Services Committee Chairman Barney Frank.
"As relatively small institutions whose assets are miniscule compared to large, interrelated companies, credit unions are highly unlikely ever to be the subject of such a resolution. Any credit union failure would be managed internally by NCUA through the National Credit Union Share Insurance Fund and, therefore, would pose no risk to the FDIC-run resolution fund," Matz wrote.
She added that it isn't fair for not-for-profit cooperatives to pay for losses caused by for profit companies.
Matz also expressed concern about having another agency besides the NCUA take supervisory action against credit unions.
Frank's committee is marking up a bill creating mechanisms for dealing with companies that are deemed to pose a systemic risk and are considered too big to fail.
The current bill makes financial institutions with more than $10 billion in assets liable for having to pay into the fund, which would be administered by the FDIC. Three credit unions would be subject to these payments: Navy Federal Credit Union, Pentagon Federal Credit Union and State Employees Credit Union.
Rep. Brad Sherman (D-Calif.) plans to introduce an amendment to raise the threshold to $75 billion. Frank said yesterday that he expects the full house to consider the regulatory legislation during the second week of December.
