The notion of combining regulatory agencies covering credit unions, banks and insurance firms may be a pet project of New York's new governor, Andrew Cuomo, but so far it has won only preliminary CU approval.
Joining the Credit Union Association of New York in giving the consolidation idea an initial green light are trade groups representing community banks.
In his state of the state address, Gov. Cuomo suggested that "radical reform" is needed to balance an out-of-control budget and consolidating 20 state agencies would help. That has included creating the new Department of Financial Regulation, merging the Insurance and Banking Departments along with the Consumer Protection Board.
For its part, the Credit Union Association of New York in a statement last week said it was giving the initial OK to the Democratic chief executive's cost-cutting plan, but it remains in a wait-and-see mode.
In the CUANY statement, William J. Mellin, president/CEO, commended the governor "for his goal of creating efficiency and streamlining state government," and while the proposed consolidation poses potential challenges, "the association believes that if executed properly, it would streamline the state's oversight of the financial services industry."
Moreover, the merger "could also create a structure that is more responsive-not only to consumers' needs but to the legitimate concerns of all financial service providers, irrespective of size or statutory authority," he said.
Yet New York CUs, he said, "feel it's essential to maintain credit union representation on the governing body of this new department," adding "just as vital is that any consolidated department includes an office specifically dedicated to credit unions to preserve the unique and vital role they play in communities throughout New York State. Such an office would guarantee appropriate expertise."
The state, he went on, needs to seize this opportunity to ensure that financial oversight not only becomes more cost effective but also fosters greater accountability.
The CUANY head also expressed dismay that the existing banking department has not been far more forceful over the years in promoting the state charter. "It seems they could become a whole lot more, and they don't, and their reasoning has always been lack of resources," he said. His trade group would be less receptive to the consolidation plan if the agency had been more of an advocate for state CUs, he concluded.
Meanwhile, the Independent Bankers Association of New York State said it too shares "the governor's objective of better regulation of modern financial services organizations" but remains anxious "to review the details of the governor's proposal to achieve a positive result."