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March 6, 2008 - NASCUS Chairman George Reynolds (GA) testified on behalf of NASCUS and state regulators at a hearing of the House Financial Services Committee focused on regulatory relief for credit unions on March 6.
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| NASCUS Chairman George Reynolds (GA) testifies before the House Financial Services Committee on March 6. Tom Dorety, right, of Suncoast Federal Credit Union represented CUNA. Photo by Ben Anderson. |
Reynolds, senior deputy commissioner of the Georgia Department of Banking and Finance, discussed provisions in H.R. 1537, the Credit Union Regulatory Improvements Act of 2007 (CURIA) and additional regulatory relief priorities for the state credit union system.
Reynolds highlighted a number of timely and critical issues including capital modernization, member business lending, conversions procedures and other necessary regulatory relief measures. “NASCUS priorities for regulatory relief focus on reforms that strengthen the state system of credit union supervision and enhance the capabilities of state-chartered credit unions,” stated Reynolds. “The ultimate goal is to meet the financial needs of consumer members while assuring that the state system is operating in a safe and sound manner.”
In his testimony, Reynolds expressed NASCUS’ steadfast support for comprehensive credit union capital reform. He emphasized that credit unions need to be assessed using risk-based standards. “Today, insured depository institutions, with the exception of credit unions utilize risk-based capital to build and monitor capital levels,” said Reynolds. “NASCUS has long supported that risk-based capital standards are appropriate – we believe it is a sound and logical approach to capital reform for credit unions.”
Further, NASCUS encourages legislators and policymakers to consider allowing access to alternative capital for credit unions. Reynolds explained that access to alternative capital would allow credit unions, as it does other financial institutions, to adjust to economic challenges and potentially thrive in an uncertain market.
NASCUS also expressed its support for enhancements to member business lending (MBL) regulations in H.R. 1537, including an increase in the MBL cap for credit unions to 20 percent and an amendment to the definition of a business loan subject to the current cap of $50,000 to $100,000. “MBL changes can provide an opportunity for credit unions to better serve their members and they are not believed to be a risk to safety and soundness, provided that sound and proper underwriting and controls are maintained in the credit union,” said Reynolds at hearing.
On conversions, NASCUS underscored the value of full transparency and disclosure in any conversion procedure. Reynolds also articulated NASCUS’ position that that any legislation concerning conversion requirements of a state-chartered credit union should recognize state law. “It is the role of state regulator, as established by state law, to determine proper procedure and disclosure for state-chartered credit union conversions,” said Reynolds.
At the hearing when asked how credit unions are helping the nation recover from the subprime crisis, Reynolds answered that state-chartered credit unions are assisting consumers faced with foreclosure and other related mortgage issues. He encouraged credit unions to continue to help consumers during this challenging economic time.
In addition , NASCUS discusses a number of other regulatory relief priorities for the state credit union system in its testimony. Some topics include exemptions from pre-merger notification requirements and fees of the Federal Trade Commission; expanded access to the Federal Home Loan Bank System for all state-chartered credit unions; and consideration of a statute that requires the National Credit Union Administration (NCUA) Board shall have one member with state credit union regulatory experience.
Witnesses at the hearing also included Tom Dorety, Suncoast Schools FCU. Tampa, FL for CUNA; Michael N. Lussier, Webster First Federal Credit Union, Webster, MA for NAFCU; and a second panel of banking represenatives.
To view NASCUS’ testimony, click here.
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