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CUNA Exemption needed in House-passed exec comp bill
WASHINGTON (8/3/09)--In a joint letter sent Friday to House Speaker Nancy Pelosi (D-Calif.), the Credit Union National Association (CUNA) and the National Association of Federal Credit Unions (NAFCU) said that while they “applaud” efforts to ensure that compensation structures do not encourage excessive risk-taking that can create systemic risk, credit unions should not be included in H.R. 3269, the Corporate and Financial Institution Compensation Fairness Act of 2009. Portions of H.R. 3629, which passed the House with a 237-185 vote, would grant regulatory powers over compensation structures or incentive-based payment arrangements that are determined to encourage inappropriate risks by financial institutions that could threaten the safety and soundness of a given institution or, more broadly, harm the economy as a whole. The legislation also exempts financial institutions that do not have incentive-based payment arrangements from some compensation disclosures, and does not require the disclosure of salaries of individuals who work for a financial institution. Rep. Jeb Hensarling (R-Texas) in a Tuesday House Financial Services markup session added an amendment that would exempt financial institutions with under $1 billion in total assets from the terms of the bill. In the letter, CUNA and NAFCU stated that while this amendment “was a step in the right direction,” the trade associations “continue to believe” that “the structure,” rather than the size of credit unions, “is the reason why they should be exempted.” The NCUA also has rules aimed discouraging excessive risk taking in place. According to the letter, “including credit unions as covered institutions under Section 4 of the legislation” and forcing the National Credit Union Administration to regulate alongside “other regulators who supervise for-profit, stock-issuing entities does not seem to make for good policy.” “We believe it is critical that not-for-profit institutions be treated differently than for-profit entities in this legislation,” the letter added, saying that it is the “different motives” of for-profit entities that “can open the door for abuse.”


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