Credit Union Magazine - January 2009 - (Page 14)

PRESIDENT’S PERSPECTIVE CUs shouldn’t be named or blamed for the current crisis. This country needs credit unions, maybe now more than ever. And the country needs a credit union movement that is regulated by a unique entity, just as credit unions are unique among financial institutions. As the new year begins, the nation faces acute issues—not the least of which is the financial industry’s continuing crisis. Credit unions played no role in triggering or prolonging this crisis. To the contrary, credit unions are the largely unsung heroes. They’ve extended credit to members, provided a safe haven for members’ savings, and focused on their mission of serving members’ needs. Still, the air is thick with talk of reforming the regulatory structure for the whole financial services industry. There’s little doubt reform is needed, particularly among regulatory system segments that proved inept in averting the calamity besieging the financial system. In the rush to reform, there’s also no question that names will be named and blame assigned. Credit unions should be neither named nor blamed. Yes, a handful of credit unions made mistakes. But overwhelmingly, the movement steered clear of the unsound lending practices that played such a prominent role in the credit crisis. Credit unions shouldn’t be punished or chastised—either through regulation or substantial changes to their regulatory structure. To paraphrase House Financial Services Committee Chairman Bar14 CREDIT UNION MAGAZINE A Nation in Need of CUs Daniel A. Mica ney Frank, D-Mass., the financial services industry isn’t elementary school, where everyone stays after school because some obnoxious students were throwing spitballs. Of particular concern should be Treasury’s Blueprint for Financial Reform, released last spring. The plain fact (as of this writing): It is, as some prominent members of Congress have pointed out, “the only existing plan out there.” From the moment this plan was released, the Credit Union National Association (CUNA) expressed unease about it, particularly its consolidation of federal financial The air is thick with talk of reforming the regulatory structure for the whole financial services industry. regulators under the umbrella of a “prudential financial regulator.” Among our chief concerns: uA mere 6% of the assets under supervision of the new prudential financial regulator would be held in what once were credit unions (now defined as “not-for-profit, cooperative, federally insured depository institutions”). For-profit institutions require vastly different regulation and supervision than do not-forprofit cooperatives. uNothing in the plan calls for the single regulator to have employees who specialize in regulating institutions other than banks. uA significant percentage of larger credit unions no longer would be uJANUARY 2009 ucuna.org tax-exempt and would have little incentive to operate as memberowned cooperatives. Some dismissed our concerns last spring, saying the plan was going nowhere. We’ll see if they sing the same tune this year. Others recognized our angst, especially Chairman Frank. He sent me a letter stating, “I can assure you that as long as I am chair of the committee—indeed I think as long as there are members of Congress who know the value of credit unions on the committee—no such proposal will have the slightest chance of succeeding.” We cherish the chairman’s support and will remind him of our continued need for it. One hundred years ago this year, credit unions were established under law in this country to give everyday people a place to save and borrow in a cooperative manner. Seventy-five years ago this year, Congress passed (and President Roosevelt enacted) the Federal Credit Union Act, allowing for a federal charter to help credit unions thrive through the Great Depression. Not coincidentally, CUNA was founded that same year to foster the growth of credit unions. Since then, credit unions (and CUNA) have done precisely what they were chartered to do. Now is no time to fix what ain’t broken. In this special anniversary year, the movement may be challenged to pull together and speak with one voice to ensure we aren’t “kept after school” with the unruly pupils. This country needs credit unions— as they are—now more than ever. DANIEL A. MICA is president/CEO of the Credit Union National Association. http://www.cuna.org

Table of Contents Feed for the Digital Edition of Credit Union Magazine - January 2009

Credit Union Magazine - January 2009 Contents On My Way Leading Edge Spotlight President's Perspective Game Plan Washington Insider Wright Stuff Executive Suite Reverse Mortgages Come of Age Six Merger Myths Leading-Edge Lenders TwentyFour/Seven Bankruptcy Compliance Tools of the Trade Trendlines Rates & Ratios Council Corner Shoptalk System Scan Marketplace Branching Out Advertiser Index

Credit Union Magazine - January 2009

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