Avoiding Coulda, Shoulda, Woulda
However, there was time when you had more staff or a bigger budget and that money got spent or time allotted to things that were hugely important at the time. Enter 2009.
Credit union and others are watching Washington with an eagle eye. Lawmakers and regulators are floating ideas and making policy left and right in knee jerk reactions to recent past events. So maybe the regulators should have realized it wasn't such a good idea to allow the ratings agencies to be funded by the very companies they're rating; something so important with now obvious systemic implications should not be left up to self-policing.
Some might call this critiquing Monday morning quarterbacking. Not at all. The conflict of interest was always there and obvious, but that was the way things were always done and so far so good, right? Exactly wrong. Precautions should have been put in place long before the problems emerged.
But those charged with oversight-the government-procrastinated on building in any system of checks and balances in this area and failed to do so in many others. You have to look ahead to prevent problems, but all the powers that be can do now is look back and react to the resulting chaos.
Take for example CURIA, the flagship legislation of credit unions half-a-dozen years ago with more than 100 co-sponsors that is now all but forgotten. For credit unions, this legislation could have helped stave off some of the problems that have been occurring in the last couple of years.
A risk-based capital framework could have helped identify some of the risk areas credit unions are hamstrung with now by possibly identifying problems at an earlier stage.
The business lending provision would have helped credit unions expand into new territories, that if taken in proper risk context, would strengthen credit unions and their communities by allowing them to fill in where the banks can't right now. This authority does not just make sense for the current credit crunch, but also to begin to chip away at the perennial complaint by small business owners that banks are not interested in making a $10,000 loan to a local landscaper for a mower.
CUNA, NAFCU and bill sponsor Rep. Paul Kanjorski made a push this week, pleading to Speaker Nancy Pelosi to include H.R. 3380, the Promoting Lending to America's Small Businesses Act, in the jobs creation package currently moving through Congress. The bill would expand credit unions' business lending authority from 12.25% of assets to 25% of assets. The current economic crisis should provide the impetus needed to get this legislation enacted because when it was still forward-thinking it didn't budge much.
If credit unions are to continue to do more with less, they will need additional authorities, such as business lending to get the job done. They will need new revenue streams in order to be able to afford "more," not only in terms of serving their members but also to be able to pay for the new compliance burdens that Congress and the regulators are ushering through faster than rabbits multiply.
Though Congress is moving at warp speed right now, it is solving yesterday and today's problems rather than looking to the future in the instances that have garnered the most headlines, such as financial services regulatory reform. Lawmakers and regulators should take away from the current crisis that they must be prescient enough to forecast the troubles ahead during the good times so they can act in a rational manner with ample time to study the scenarios. The government of all organizations is practiced at doing less with more. A truly free society can't allow it.
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