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Coverage prompts Minn. Senate hearing on FIs
ST. PAUL, Minn. (10/8/09)--The Minnesota Senate Commerce and Consumer Protection Committee held a hearing Tuesday to examine the lending practices and oversight of financial institutions in Minnesota, including credit unions. The hearing has been in the works for more than two months, following a series of articles published in the Minneapolis/St. Paul Star Tribune in late July. The article, entitled “Lenders Gone Wild,” placed blame on banks, credit unions and the Department of Commerce for taking too much risk and playing a role in the recent economic collapse. The hearing was called by State Sen. Linda Scheid (DFL-Brooklyn Park), who chairs the committee, which has jurisdiction over all bills relating to banking in the state of Minnesota. Scheid said she was eager to learn more about the regulation and examination of financial institutions. “Minnesota has a large number of community banks and national banks with a large presence here, and we certainly have strong credit unions as well,” she said. “It’s important that consumers know that their money is safe in our state’s financial institutions.”
Click to view larger image Minnesota Commerce Commissioner Glen Wilson (left) and Deputy Commissioner Kevin Murphy testified at a Minnesota Senate hearing Tuesday in St. Paul to examine the lending practices and oversight of financial institutions, including credit unions, in Minnesota. (Photos provided by the Minnesota Credit Union Network)
The safety and soundness of credit unions and banks was reiterated throughout the afternoon. The hearing’s list of testifiers--10 in total--represented credit unions, banks and regulators. The Minnesota Department of Commerce began the meeting with Commissioner Glen Wilson and Deputy Commissioner Kevin Murphy providing an overview of banks and credit unions, key objectives of regulation and examinations, reports and rating systems, watch lists, and statistical data about market share and bank failure rates over the past 30 years. Subsequent testifiers also discussed deposit insurance, lending in the current economy, and the overall health and strength of credit unions. “It was noted several times that credit unions are safe and sound financial institutions, and I think that message was heard loud and clear,” said Mark D. Cummins, president/CEO of the Minnesota Credit Union Network. “The line up of testifiers was quite impressive,” Cummins added. “The various organizations provided facts and information from their own perspectives, but all the testimony carried the same underlying theme--that additional regulation would likely be burdensome and unnecessary.” Cummins spoke at the hearing, along with National Credit Union Administration (NCUA) Region IV Director Keith Morton, US FCU President/CEO Bill Raker, and representatives from the Federal Deposit Insurance Corp. (FDIC), the Minnesota Bankers’ Association, the Minnesota Independent Community Bankers and two bank presidents. Morton educated the committee about credit unions’ structure, discussed their strict underwriting standards, and provided factual context to credit unions’ role in the financial downturn. “As a general rule, credit unions are conservatively run,” Morton said. “While there are credit unions that pursue aggressive strategies, as a whole, Minnesota credit unions have not been significantly affected by the loans and investment products that have been the subject of market and media attention during this economic crisis.” Several testifiers cited the healthy working relationship between not only state and federal regulators, but between the regulators and the financial institutions they oversee. “The state plays an important role, along with the NCUA, to ensure that both state- and federally chartered credit unions are properly examined and well-regulated,” Raker said. “While the public’s trust and confidence in many financial institutions have suffered some erosion, credit unions are still held in high regard by their member-owners.” Deputy Commissioner Murphy agreed. “In this economic climate, there are not a lot of sure things in this world,” he said. “But a deposit at a bank or a credit union is a sure thing. Consumers can take comfort in that.” He pointed to financial illiteracy as a significant cause of today’s economic woes and encouraged legislators and financial institutions to devote greater resources to financial education efforts. Ultimately, Scheid said that she does not foresee Minnesota imposing additional regulation on financial institutions. “I’m pleased that Sen. Scheid used this forum to learn more about the regulation of credit unions and banks, using our organizations as the industry experts, as opposed to media reports and second-hand information,” Cummins said. “Through this hearing the credit union industry had an opportunity to speak directly with legislators and set the record straight about generalizations that have been imposed upon the general public.”


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