WASHINGTON – The credit union lobby groups wasted no time in rejecting the Bush administration’s regulatory reform proposal that would merge NCUA into banking agencies and create a national mortgage regulator.
Indicating the tough road ahead for the plan, CUNA contacted the White House and Capitol Hill on Sunday – before the plan was made public – saying a combination of the credit union agencies with banking regulators could threaten the future of credit unions. CUNA President Dan Mica sent a letter to Treasury Secretary Henry Paulson noting the plan would eliminate separate charters for credit unions, banks and thrifts and combine their regulation, “resulting in the demise of credit unions as they function today and severely limiting choices in the financial marketplace for consumers.”
NAFCU also vowed to fight the proposal. “We believe that our independent regulator is necessary to maintain the independence of the credit union industry,” said Carrie Hunt, senior regulatory lobbyist for NAFCU, adding elimination of an independent credit union regulatory agency would jeopardize the unique place that credit unions enjoy in the financial marketplace.
NCUA's response was much more measured, with the NCUA Board issuing a statement saying it has "significant concerns that the many consumer benefits of the credit union system would be threatened by an restructuring proposal that may blur the credit union charter" by eliminating the independent credit union regulator.
NAFCU President Fred Becker acknowledged that any enactment of the comprehensive reform plan will face tough opposition from many constituents and is not likely in the short term. Becker predicted that Treasury’s proposal would not go far in the waning days of the Bush administration or the final session of this Congress. “We believe it is more likely that some of the legislative matters already before us, including mortgage reform, will move forward this year and we look forward to getting those bills enacted.”
Even Secretary Paulson stated that major changes are unlikely in the near future. "These long-term ideas require thoughtful discussion and will not be resolved this month or even this year," he said.
The plan also would: create an optional federal charter for insurance companies; merge the Commodity Futures Exchange Commission into the Securities and Exchange Commission; and eliminate the Office of Thrift Supervision, among other things.
CUNA Mutual Group yesterday said it endorses the proposal for a federal insurance charter, which would be more efficient and less costly than the current 50-state regulatory structure for insurers. The credit union insurer is supporting current legislation that would create a federal charter.