WASHINGTON-Co-Ops For Change released an updated agenda for what it wants to see from NCUA, highlighting concerns around harm to CUs it says is being caused by recent regulations and legislation.
After announcing an initial focus on reorienting credit unions-including NCUA and the political process of board appointment-back toward the Seven Cooperative Principles, Co-Ops For Change is now in the process of finishing a survey of credit unions for areas where it thinks NCUA policies and examinations need to be changed.
In a statement, Chip Filson, the chairman of Callahan & Associates and the primary driver behind Co-ops For Change, said the financial crisis of 2008-10 precipitated multiple private and public assessments of the regulatory role for financial institutions, including Dodd-Frank and the CFPB along with all of the new rules created.
While CUs were not targeted by either, Filson believes NCUA has over-reacted, including overly limiting corporate CUs and dismantling the Central Liquidity Facility.
"Studies show crises inevitably start with a liquidity crisis and morph into a capital crisis," Filson told Credit Union Journal. "That leads to a fire sale. Liquidity is absolutely essential. We are now dependent on the very financial institutions that failed in the last crisis."
What Filson said he and other CU leaders affiliated with Co-Ops For Change want to see is NCUA's leadership addressing the lessons that were learned during the financial crisis.
"The underlying assumption is that regulation must be a dynamic activity-responsive to the creative potential of the cooperative charter, as well as changing external forces," said Filson. "Effective regulation calls for a constant dialogue, based on mutual respect, between the regulator and the regulated. In this approach, the regulator not only models co-operative principles, but also advances member-owned solutions for community needs.
'Treated Like Banks'
The updated agenda Filson and Co-Ops For Change has for credit unions can be found at www.coops4change.org.
"Regulating credit unions should not be like regulating banks," Filson noted. "NCUA treats credit unions like banks. The banking regulator tries to protect the consumers/customers from the stockholder-owned banks. Banks want to extract all that they can from the relationship. That does not happen in credit unions."
Filson said the financial crisis only reinforced differences between banks and CUs, noting the FDIC was able to run a deficit for five years because it is backstopped by the federal government. "The NCUSIF is designed to keep that from happening," said Filson, who was at NCUA in the early 1980s when the NCUSIF had to be recapitalized. "The NCUSIF is the first real example of PCA. The CU system should never have to depend on public funds."
Filson is critical of what he calls "contrary" and "unilateral" actions taken by NCUA during the crisis, although he is supportive of one "cooperative" approach, the corporate guarantee of funds. But that was followed within 60 days by the conservatorships of U.S. Central and WesCorp, a "bank-like" solution Filson said "contradicts the way the system raises capital."
He added he believes "the jury is still out" on whether the conservatorships were appropriate.
