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CUs unique nature requires own regulator says NCUA
WASHINGTON (11/28/07)—The National Credit Union Administration (NCUA) pointed to its success under the current regulatory structure and the unique nature of the credit unions under its supervision as key to demonstrating a need to maintain the current regulatory regime. In a comment letter addressed to Treasury Secretary Henry Paulson, the NCUA wrote that several facts concerning the structure and operation of credit unions segregate the financial cooperatives—and their regulatory system—from “the core concerns raised” the an ongoing Treasury study. The Treasury Department has been seeking comment on the regulatory structure of the country's financial institutions and whether improvements are needed. The Treasury request came on the heels of a Government Accountability Office (GAO) study released last month that examined federal financial institution oversight and recommended consolidation of the regulators. “The current regulatory structure for all depository institutions has effectively met the needs of the regulated industries and resulted innovation, leading ultimately to better products, services and choice for the American consumer,” wrote NCUA Chairman JoAnn Johnson. “One concern with the structure (as noted in the GAO report) is the blurred lines of oversight due to changes in the financial industry. The regulators have made changes to address the blurred line between services and are working together through interagency committees to address common issues," she added. The NCUA also said that the current regulatory structure allows depository institutions “of all sizes and types” to be fairly represented in the marketplace due to the “specialized attention provide by each regulatory agency.” “Since each regulator oversees a specific group, the business needs and risks of those groups can be fully understood and regulated accordingly,” Johnson wrote. Among other points addressed by the NCUA, the federal regulator urged modifications to the Fedearl Credit Union Act to “enable credit unions to continue their safe and sound operations and fulfill Congressionally mandated public policy objectives.” Specifically the agency said credit union need: an enhanced and modernized Prompt Corrective Action system which would allow a “more robust” risk-based capital standard’ and clarification that all types of federally chartered credit union may adopt underserved communities. Provisions for both are contained within the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537).

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