In his letter to Treasury Secretary Henry Paulson, Mica said, "When I asked you during last week's press conference if there was something credit unions had done to be treated in this manner – essentially put on track to be put out of business – your response was, 'that is not our intent and that would not be the effect.'
"However, our review of the actual recommendations clearly reveals that the report does not support that comment."
Mica then outlined the ways in which the "blueprint" represents a change in posture toward credit unions by Treasury from positive to negative.
- A significant percentage of the nation's larger credit unions would no longer be tax exempt and have little incentive to operate as cooperatives owned by their members;
- Under the "Blueprint," a mere 6% of the assets under supervision of the proposed Prudential Financial Regulator would be in not-for-profit, cooperative federally insured depository institutions (FIDIs), i.e., former credit unions. The types of regulation and supervision that a for-profit institution requires are very different from those that best apply to not-for-profit cooperatives;
- Nothing in the report calls for the single regulator to have employees who specialize in regulating institutions other than banks;
- Given the distribution of assets under supervision, almost all banks, it appears unlikely that the Prudential Financial Regulator would not expect all institutions to act like for-profit banks, and design its regulations and supervision to deal with for-profit institutions; and
- A number of descriptions in the report regarding credit unions are very similar to the mischaracterizations that the banking industry routinely uses. Some of the most biased statements in the report are found on page 160, reflecting banker rhetoric that credit unions must only serve those of modest means and must remain small institutions.
"Given the Treasury's lack of understanding about credit unions, it is no surprise that the 'Blueprint' would set in motion a plan that will result in their demise," Mica wrote.
"In the process, consumers would not be protected and an important alternative to for-profit banks would be eliminated from the financial marketplace in the name of efficiency."
Use the resource link below for the full text of the CUNA letter to Treasury.
courtesy of cuna.org