The United States Congress is working on all sorts of "fixes" to help prevent some of the large scale financial failures that we have seen over the past year. A new agency to oversee large financial institutions is one idea being considered by Congress. This new agency would be called the Consumer Financial Protection Agency (CFPA) and one amendment to this proposed legislation (H.R. 3126) would be that the proposed CFPA's examination and enforcement authority be limited to credit unions with more than $1.5 Billion in assets and banks with more than $10 Billion in assets. Under the proposal, financial institutions under the proposed caps would remain under the enforcement authority of their current regulator.
I see several problems with this proposal. First off, we should not be dividing the credit union industry into separate regulators. All credit unions, big and small, share the same structure and are owned by their member-owners. The National Credit Union Administration is fully capable of overseeing credit unions of all sizes. Where there have been problems in credit unions, the focus should be on how good was the oversight from the existing regulator at the time. The knee-jerk reaction sometimes is to assume that a new law or regulation will fix a problem when the original problem could have been prevented by the existing laws and regulations if enacted properly. The credit union industry as a whole was not the source of the financial problems that we have seen over the past year.
I also don't see why there is an asset size differential between the large credit unions and banks for the proposed agency. Is a $1.5 Billion dollar credit union somehow more complex than a $10 Billion dollar bank? If anything I would see the opposite to be true in terms of balance sheet complexity between a bank and a credit union.
North Alabama Educators Credit Union currently holds roughly $73 Million in total assets so we would not be included under the authority of the new proposed agency. Regardless of this fact, a unified credit union industry is in the best interest of all credit unions so we stand opposed to the proposed H.R. 3126 because of this different treatment based upon asset size.