WASHINGTON — Sometimes the life of a federal regulator is all about preparing yourself for the question that never really comes.

NCUA Board Chairman JoAnn Johnson had been scheduled to address CUNA's Governmental Affairs Conference during the general session on March 4, but instead found herself called to an oversight hearing of the Senate Committee on Banking, Housing and Urban Development. The Committee called the hearing to inquire into the health of the U.S. banking industry during the current difficulties in the credit, housing, and mortgage markets.

Johnson's 24 pages of prepared comments for the hearing sought to walk the narrow line between acknowledging the rough economic environment in which credit unions find themselves and reassuring the committee about their safety and soundness.

“Despite the dislocations in the credit markets, and the attendant effect on the mortgage industry and now the broader economy, the federally insured credit union industry continues to be financially strong,” Johnson said. “NCUA is very aware of the need for close and diligent regulatory oversight in the context of the difficult environment cited above.”

But once her prepared comments were done, the rest of the hearing's questions centered on issues surrounding banks and bankers and carried little relevance for credit unions. Senators expressed concern about a wide variety of questions, including the implementation of capital standards and whether the new Basel II capital regulation system, which is gradually being implemented in this country but is more advanced in Europe, would have helped or hurt banks struggling through the current economic situation.

Johnson interjected a credit union answer into the conversation, however, when she asserted herself in response to a general question about those Basel II capital standards.

“I'd like to answer that,” Johnson said, fielding a question from Committee Chairman Christopher Dodd (D-Conn.) on Basel II that appeared to be directed toward Comptroller of the Currency John Dugan. “While credit unions don't fall under Basel, we do have a risk-based capital proposal on the table for Congress to take a look at. I would ask your serious consideration. This would give us a real tool as a regulator to identify problems more quickly and it would help credit unions manage their risk more effectively. And it's our risk-based capital prompt corrective action proposal that we have been working three years on and I would ask your consideration.”

Chairman Dodd made no response and the conversation stayed firmly fixed on bank issues for the rest of the hearing.

–dmorrison@cutimes.com

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