WASHINGTON (3/20/09)--National Credit Union Administration (NCUA) Chairman Michael Fryzel Thursday underscored the public policy benefits of a distinct federal credit union regulatory and insurance entity in testimony before the Senate Banking Committee. The committee was conducting its first in a series of 2009 hearings on modernizing the regulatory structure for the country’s credit unions, banks and thrifts. The Credit Union National Association will testify next Tuesday at the committee’s second hearing. Fryzel told the banking panel that credit unions deserve and require a separate regulator because they are fundamentally different in structure and operation than other types of financial institutions. “Our strong belief is that these unique and distinct institutions require unique and distinct regulation,” testified Fryzel. The chairman did back, however, the concept of a federal oversight entity, charged with establishing general safety and soundness standards, issuing principles-based guidance and monitoring systemic risk. According to NCUA, under that proposal the NCUA and other regulators would remain responsible for enforcement, and an independent NCUA and National Credit Union Share Insurance Fund (NCUSIF) would be in place to preserve the credit union regulatory structure “that has been tested and proven to work for almost 40 years.” National Association of State Credit Union Supervisors (NASCUS) Chairman George Reynolds also testified, as did federal and state bank and thrift regulators. Reynolds, who is senior deputy commissioner of the Georgia Department of Banking and Finance, outlined four principles that his group says must be considered in regulatory modernization legislation: preserve charter choice and dual chartering, maintain states’ role in financial regulation, modernize the capital system for credit unions and recognize the value of state authority in consumer protection.