Tuesday, April 15, 2014

Why is NCUA a Voting Member on FSOC?

The Dodd-Frank Act created the Financial Stability Oversight Council (FSOC). FSOC is made up of ten voting members and five nonvoting members.

But should the National Credit Union Administration (NCUA) be a voting member?

A report by the Bipartisan Policy Center to create a more effective regulatory architecture recommended making NCUA a non-voting member on the FSOC.

The report noted that "while it is useful to have representation on the FSOC from the NCUA, it makes little sense for the NCUA to have a vote equal to the Federal Reserve on all matters before the Council, particularly when the NCUA does not oversee a single institution that meets the criteria established by Congress or the FSOC as requiring enhanced supervision due to systemic importance."

The report recommends that "[t]he chair of the NCUA should become a non-voting member. Credit unions are an important part of the U.S. financial system, but they generally are small and do not figure into macro-prudential discussions. To the extent they do, a credit union voice will still be represented on the FSOC, but without a vote."

This recommendation really irked one credit union blogger, who wrote "[t]his is bureaucratese for patting credit unions on the head and sending them to the corner with crayons while the adults do all the important work."

Read the report.


  1. Let me rephrase this. Credit unions. You are mini-banks. You deserve full taxes. Limited powers. Limited representation on federal panels that govern your operations.

    Dr. Leggett, did I get this right?

    1. No, you did not get "this" right.
      Many CUs are banks.
      They should be taxed and have the same powers as banks.
      Then they will have equal footing and equal rep on all the committees that don't accomplish anything, just as now.
      But you will save money on Cuna and league dues, which is a wasteful use of member money.
      Got it?

    2. When the S&Ls got full taxation, they did not get the full banking powers. No bank trade association leader has indicated full banking powers for CUs if taxation went through.

    3. "S&L's didnt get full banbking powers".
      access to capital- yes.
      unlimited field of membership-yes.
      increased small business lending capacity- yes.
      btw, the author of this blog has said at least a few times that he and his assoc is NOT against increased powers for CUs, theyre just FOR the elimination of the tax exemption---I think.

  2. No they did not. They were limited to what types of loans they could make and percentages. S&Ls were legally bound to make mortgage loans and were limited to the amount of personal/vehicle loans they could make. They were not able to do all of the commercial loans banks could do - the same as credit unions are limited today.

    And "increased powers" is not "full powers." Then where are the banking associations pushing legislation to allow mutually-owned BANKS access to FDIC deposit insurance?

  3. Mutual savings banks and cooperative banks have deposit insurance coverage through FDIC. This was part of FIRREA, which was enacted in 1989.

    1. Yes, but a credit union cannot convert directly to an OCC-chartered bank with FDIC insurance. The only FDIC option for a converting credit union is a mutual savings bank - without all the powers of a community bank while paying full taxes.

    2. Really?
      Better double check your source there Skippy.

    3. I personally did. No law allowing such has been added in the last 15 years.

    4. they dont need a law.
      once a savings bank, they have fdic insurance & essentially all the powers-or the ability to get the powers-of any bank! can also convert to an occ bank if thats what their business plan calls for and this can be done significantly easier and less costly than a cu can convert.

  4. Again, there is no provision for the FDIC to allow for a mutually-owned commericial bank to be insured. That is the issue. If the CU converts to some privately-held corporation, then it could become a commericial bank.



The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.