WASHINGTON (3/31/08)--The Credit Union National Association (CUNA) Sunday blasted a proposed U.S. Treasury financial regulatory overhaul which initial reports said would consolidate federal credit unions, national banks and federal thrifts into a single "federally insured depository institution" charter. The proposal ultimately would phase out the National Credit Union Administration and place banks and credit unions under one regulator’s oversight. CUNA President/CEO Dan Mica Sunday afternoon said the association was “astonished and angered” by its initial interpretation of the proposals, which he said “add up to more choices for Wall Street and less for consumers--and turn credit unions into banks.” Mica said Treasury’s proposal makes “no sense” for consumers, who would “pay more, and get less in return.” “The consolidation plan will only result in increased loan rates, decreased savings rates, higher fees, and the loss of a not-for-profit alternative for the nation's 90 million credit union members,” said the CUNA leader. Mica is scheduled to attend a briefing Monday morning with Treasury Secretary Henry Paulson to discuss the plan’s details, some of which were leaked to media outlets during the weekend. By Saturday night, a 22-page summary of the plan was posted on the New York Times
, Washington Post
, and CNNMoney
websites. Treasury’s long-term recommendations, most of which would require legislation, call for reducing the number of federal financial regulators down to three:
* The Federal Reserve would focus on systemic risk within the financial system and would have oversight over all financial holding companies; * A “prudential financial regulator” would supervise the single “federal insured institutions” charter; and * A “business conduct regulator” would monitor conduct, including consumer protection, across all financial service companies.
Mica questioned the proposed changes to credit union regulatory oversight, and pointed out that “time and again, credit unions were the one type of financial institution that did not require government assistance or rescue.” “Credit unions are not the cause of today’s housing and credit crisis; indeed they have been lauded in the media and by policy makers for their performance and willingness to help consumers in these troubled times,” said the credit union leader. “It was no different during the Great Depression, the savings and loan crisis or any other turbulent economic period in our nation’s history since the formation of credit unions nearly 100 years ago.” Mica reiterated that any plan that would eliminate the credit union choice for consumers in the financial marketplace is “poor public policy and extremely shortsighted.” “We will immediately move to energize our grassroots and political activists in the entire credit union movement to oppose any effort that would lead to the termination of the credit union system,” said Mica, who also criticized the process Treasury used in developing its recommendations. “While Treasury did seek comment on general issues, it did not seek the financial services community's views on anything as specific as the plan now being unveiled,” he said. “Issues of this magnitude deserve more thorough consideration and discussion with the entities that will be impacted.” “As it is, Treasury has badly missed the mark,” said Mica. “CUNA will take whatever steps necessary to preserve the option of not-for-profit cooperative finance for the American consumer.” By Sunday evening, Mica in a letter to Secretary Paulson, had outlined CUNA’s objections to the proposal. Use the link below to read CUNA’s synopsis of the Treasury’s executive summary. CUNA will review the entire 200-page proposal after the Treasury releases it Monday.