PRESS RELEASE
October 21, 2008
Arlington, Virginia – In a submission for the record, NASCUS urged the House Committee on Financial Services to consider credit union capital improvements in their deliberation of regulatory reform proposals.
The House Financial Services Committee held a hearing on October 21 to address the need for broad regulatory restructuring and reform for financial markets, including financial institutions. NASCUS communicated to the Committee that capital reform for credit unions is an important part of regulatory reform and is crucial to safety and soundness. “The current economic environment necessitates that now is the time for capital reform for credit unions,” stated NASCUS.
NASCUS explained that credit unions need comprehensive capital reform, which includes access to supplemental capital. Supplemental capital would allow credit unions further flexibility in changing market conditions, enhancing their future viability and strengthening their safety and soundness. It would allow credit unions to accumulate net worth beyond retained earnings, protect their liquidity, and plan and respond proactively and efficiently in a constantly changing financial environment.
“While credit unions remain safe and sound in this troubled and volatile market, capital reform will enhance their ability to react to market conditions, grow into the future and serve citizens in local communities in times of economic trouble,” wrote NASCUS.
Further, NASCUS explained that a one-size-fits-all capital system does not work and that credit unions should be allowed to use risk-based capital requirements, like other insured depository institutions. “A risk-based capital system acknowledges the diversity and complexity between financial institutions,” noted NASCUS. “A risk-based capital regime would require credit unions to more effectively monitor risks in their balance sheets.”
NASCUS also stated that supplemental capital would provide additional protection for the National Credit Union Share Insurance Fund (NCUSIF), minimizing exposure to taxpayers.
To view the submission for the record, click here.
Information
Contact:
Kate Hartig, Director, Communications and Public Affairs,
(703) 528-0669 or kate@nascus.org
The
NASCUS mission is to enhance state credit union
supervision and advocate a safe and sound state
credit union system.
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