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CU System
CU governance challenges tops Tuesday conference panel topics
LAS VEGAS (7/14/10)--The question of performance standards, capabilities and remuneration for credit union directors worldwide dominated discussion among regulators and economists who served as panelists during twin general session discussions Tuesday at The 1 Credit Union Conference.
Click to view larger imageThe financial crisis brought the topic of regulation and supervision to the forefront, said a global panel of regulators during The 1 Credit Union Conference, which ends today in Las Vegas. From left are the discussion’s moderator, Daniel Burns, a director of the World Council of Credit Unions and first vice chair of Credit Union Central of Canada; Andy Poprawa, president/CEO of the Deposit Insurance Corp. of Ontario, Canada; Gigi Hyland, National Credit Union Administration Board member; and Brandon Khoo, executive general manager of the Australian Prudential Regulatory Authority.
The conference is the joint meeting co-sponsored by Credit Union National Association (CUNA) and World Council of Credit Unions (WOCCU). Situations differ for directors in Australia, Canada, Europe and the U.S., but performance requirements are the same--meaning greater levels of both responsibility and risk for volunteer and paid directors at credit unions worldwide. Participants in a panel focused on recent regulatory development agreed that clearer definitions of board terms and responsibilities would make governance easier to regulate. Gigi Hyland, a board member at the National Credit Union Administration in the U.S.; Brandon Khoo, executive general manager for the Australian Prudential Regulatory Authority; and Andy Poprawa, president/CEO of the Deposit Insurance Corporation of Ontario, Canada, offered insights into conditions in each of their own countries in a panel moderated by Daniel Burns, WOCCU director and first vice chair of Credit Union Central Canada. “Currently, there are no board term limits in the U.S.,” said Hyland. “That means some directors can serve 30, 40, 50 and even 60 years. While that’s not necessarily a bad thing, it may mean that directors don’t always have the fresh set of eyes needed to see changes in their credit union and the market.”
“Many credit unions lost capital in corporates. Are the credit unions ready to step up to the plate again?” asked National Credit Union Administration Board member Gigi Hyland, appearing with an international panel of credit union regulators at The 1 Credit Union Conference Tuesday. “We have to find a way to deal with toxic assets,” she added. (Photos provided by the World Council of Credit Unions)
A larger issue in many countries is the absence of board performance standards, which has the potential to pose significant risk for some credit unions, according to Poprawa, who also chairs WOCCU’s International Regulators Roundtable, an annual meeting that will take place Thursday after the close of the conference. “We have to be satisfied that people on boards have the right set of skills, that they can read a balance sheet and financial statements. This is more challenging in small credit unions,” Poprawa added. “Governance is an area of interest and also one of primary risk for global credit unions,” said Poprawa. “The Regulators Roundtable sees this and will be addressing the possible creation of global governance standards at its meeting.” Other topics addressed by the panel included the future of corporate credit unions and access to supplemental capital. “Credit unions have been able to issue capital instruments since 1992 in Australia,” said Khoo. “They are limited in Tier 1 instruments because they’re mutuals, but there are a small number and it’s a challenge to find Tier 1 instruments,” he said. For a report on the second panel, see the related story inNews Now, “Interchange, board governance and more focus of global leaders panel.
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