WASHINGTON — Credit unions have a good friend in a very high place on Capitol Hill, and that could come in handy during the upcoming debate on overhauling financial services regulation.
House Financial Services Committee Chairman Barney Frank (D-Mass.) said at last Tuesday's hearing on the subject that credit unions bear "absolutely no responsibility [for the current problems in the housing market] and are entitled to be recognized for that."
Frank's remarks were in response to comments by Rep. Paul Kanjorski (D-Pa.) when Kanjorski placed letters from NAFCU and NASCUS on regulatory reform into the record for last Tuesday's panel; CUNA submitted a letter later in the day.
Recommended For You
The House Financial Services Committee sought input from economists and representatives of the financial services industry on ways to improve how government regulates that sector of the economy. Representatives of the credit union industry were not invited to testify at the session, but CUNA, NAFCU and NASCUS sent letters expressing their views.
All three groups called for allowing credit unions to have a risk-based capital system.
NASCUS called for overhauling the credit union capital system so those institutions can have access to more money to "react more quickly and to strengthen net worth beyond the accumulation of retained earnings, which takes time and is not always feasible in a fast-changing environment."
CUNA President/CEO Dan Mica echoed NASCUS' sentiments on secondary and risk-based capital and urged lawmakers to include them in any economic stimulus bill enacted later this year.
"We know credit unions cannot be the entire solution to the problems our economy faces, but we remain an important resource to credit union members; and data suggests that the existence of a strong credit union movement benefits all consumers," he wrote members of the Senate Banking Committee and the House Financial Services Committee.
House and Senate leaders have talked about such a measure, which would include increases in unemployment benefits and food stamps and additional funds to improve the infrastructure.
Federal Reserve Chairman Ben Bernanke told a House committee last Monday that any fiscal package should include measures to improve access to credit by consumers, homebuyers and businesses.
Mica and NAFCU/CEO President Fred Becker urged the lawmakers to raise the cap on member business loans from 12.25% to 20%.
Becker said raising the cap, and enacting risk-based capital, would help credit unions make up for some of the loss of capital in the economy as a result of the reluctance of some banks to lend money.
Becker also urged the committee to maintain NCUA as an independent agency.
"The mortgage practices that caused the subprime crisis stand in stark contrast to the credit union guiding principle of 'people helping people,'" he wrote. "NAFCU is pleased that credit unions did not cause the turmoil in the housing market, which has led to this deepening crisis. This was due in part to the oversight that the National Credit Union Administration (NCUA) provided the credit union community."
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
