Mica urges Paulson to support CU PCA reform

July 11, 2008

FOR IMMEDIATE RELEASE
Contact: Patrick Keefe -- (202) 508-6765
pkeefe@cuna.com

Applauding testimony by Secretary of the Treasury Henry Paulson that he “appreciates what credit unions do” and does not want to “impact credit unions,” the leader of the nation’s largest credit union group has urged Paulson to support risked-based PCA reform for credit unions.

In a letter to Paulson following his testimony before the House Financial Services Committee Thursday (July 10), CUNA President and CEO Dan Mica requested that the Treasury secretary “support PCA revisions for credit unions.”

“We are hopeful that a hearing will be held on the PCA reforms developed by the National Credit Union Administration in the coming weeks,” Mica wrote. “Given the implementation of Basel II and the fact that a new proposal from the Federal Deposit Insurance Corporation and the Federal Reserve Board is pending that would allow all except the largest banks to take advantage of Basel II-type standards modified to fit their risk profiles, it is timely and appropriate to consider risk-based PCA reform for credit unions.”

The complete text of Mica’s letter to Paulson follows:

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July 11, 2008

The Honorable Henry M. Paulson, Jr.
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Dear Secretary Paulson:

On behalf of the Credit Union National Association, I applaud your comments yesterday before the House Financial Services Committee during which you stated you “appreciate what credit unions do” and that you do not want to “impact credit unions.” By way of background, CUNA is the largest credit union advocacy organization in this country, representing approximately 90% of our nation’s 8,300 state and federal credit unions, which serve more than 90 million members.

In the context of the Committee’s hearing on financial restructuring, we have written to Chairman Barney Frank (D-MA) and Ranking Member Spencer Bachus (R-AL) urging their support for revisions to the Federal Credit Union Act that will replace the current inflexible statutory net worth standards for credit unions with a risk-based system that will more accurately reflect a credit union’s portfolio risk.

We are hopeful that a hearing will be held on the PCA reforms developed by the National Credit Union Administration in the coming weeks. Given the implementation of Basel II and the fact that a new proposal from the Federal Deposit Insurance Corporation and the Federal Reserve Board is pending that would allow all except the largest banks to take advantage of Basel II-type standards modified to fit their risk profiles, it is timely and appropriate to consider risk-based PCA reform for credit unions.

We appreciate that the Treasury Department and Federal Reserve Board are grappling with very difficult and unprecedented issues, and we sincerely wish you well in your efforts to address them. Likewise, we welcome your recognition of credit unions yesterday and respectfully request that consistent with your comments the Treasury support PCA revisions for credit unions.

Sincerely,
Daniel A. Mica
President and CEO
Credit Union National Assn.
Washington, DC

Copyright © 2008 - Credit Union National Association, Inc.