WASHINGTON, DC (August 12, 2013) -- Three perceptions get in the way of understanding why regulating credit unions is different from banks, says Co-Ops for Change Founder Chip Filson:
- the similarity of credit unions and banks’ products and services,
- regulators’ tendency to mimic each other’s supervisory practices, and
- a lack of understanding among many about how cooperatives work.
“It’s important to distinguish cooperative institutions from traditional banking,” said Filson, who is also the Chairman of Callahan & Associates. “While credit unions’ business tactics have evolved so their transactions are similar to banking, their purpose, ownership structure, and financial model are fundamentally different.”
To bolster this understanding, Filson and other leaders of the Co-Ops for Change initiative have been talking to industry leaders, legislators and other groups. A just-released paper, entitled “Why Regulating Financial Cooperatives is Different from Banking Regulation,” examines these issues on www.creditunions.com. It contrasts the missions and functions of bank and credit union regulatory processes – both from a historical and philosophical perspective.
These efforts are the latest commentary from Co-Ops for Change, a grass roots initiative raising awareness of the need that credit union regulators lead from cooperative principles. Other efforts undertaken include a White House petition seeking NCUA appointments who understand cooperatives; an agenda for addressing lessons from the financial crisis, a survey to learn about credit unions’ priorities for NCUA, and publication of interactive spreadsheets to review the latest legacy assets’ results from the five conserved corporates.
According to Filson, “the error of equating credit union regulation with banking oversight could be the greatest threat to the cooperative model.”
To further his commitment to regulatory governance that leads from cooperative principles, Filson announced in February his intent to seek the Republican seat on the NCUA Board. The seat became open on August 2, with the expiration of Mike Fryzel’s term.
“I believe understanding these differences and the unique capabilities of cooperatives’ are critical to every Board Member’s effectiveness,” he said. “This understanding is even more important as we learn the lessons of the past crisis. With this approach, I believe confidence between the governed and NCUA can be restored.”
About Co-Ops for Change
Co-Ops for Change is a grassroots movement to increase awareness both within the credit union community and among elected policymakers that our regulatory leadership should understand and support the seven cooperative principles. The regulatory process should consider credit unions’ cooperative character, as well as the shared economic value they create for people and communities. Credit union members, volunteers, professionals and industry supporters can learn more about the campaign at www.Coops4Change.org.