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Exclude CUs from systemic risk legislation CUNA says
WASHINGTON (11/4/09)--In a Tuesday letter to House Financial Services Committee Chairman Barney Frank (D-Mass.) and ranking member Spencer Bachus (R-Ala.), Credit Union National Association (CUNA) President/CEO Dan Mica said that credit unions should not be entangled in the Financial Stability Improvement Act, which is meant to address “too big to fail” institutions and the dangers they impose on the U.S. financial system. Mica encouraged lawmakers to “consider the effect” that the systemic risk legislation, which was taken up for markup on Tuesday, “would have on credit unions, and whether it is good public policy for member-owned financial cooperatives to be asked to cover the losses of large, complex, for-profit financial companies.” The draft bill, according to a House summary, will “create a mechanism for monitoring and reducing the threats that systemically risky firms pose to the financial system, establish a process for winding down large, financially-troubled non-bank financial institutions in a way that protects American taxpayers and minimizes the impact on the financial system,” and “overhaul and update” the current financial regulatory system. Specifically, CUNA objects to portions of the legislation that would require credit unions with over $10 billion in assets to pay fees to the Federal Deposit Insurance Corporation to “insure risky behavior of huge, complex for-profit financial companies,” CUNA Vice President of Legislative Affairs Ryan Donovan said. According to Mica, credit unions should not be addressed by the legislation as they do not pose any systemic risk to the financial system. “In fact,” Mica added, “evidence suggests that the small number of credit unions facing challenges today are victims of the crisis, primarily resulting from the markets in which they operate.” Mica said that credit unions “continue to play a vital role in the financial well-being of their members,” continue to lend responsibly, and are well capitalized. The failure of any single credit union or a group of credit unions would not have a systemic impact on the financial system,” he added. Additionally, any issues within the greater credit union system have been resolved internally through the National Credit Union Share Insurance Fund (NCUSIF), Mica said. For the full CUNA letter, use the resource link.

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