Home Credit union Credit unions focus on proportionality ahead of G20 | 2021-09-29

Credit unions focus on proportionality ahead of G20 | 2021-09-29

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U.S. credit unions, like their counterparts around the world, are very different from large international banks and should be regulated as such, CUNA chief advocate Ryan Donovan said on Wednesday. Donovan spoke during a World Council of Credit Unions webinar on the importance of proportionality on the part of standard setters.

Proportionality allows national regulators to adapt rules often designed for large internationally active banks to allow local and community financial institutions to function.

CUNA and the World Council wrote to Treasury Secretary Janet Yellen earlier this year asking the G20 to include language in its statement noting that proportionality is key to increasing financial inclusion.

“One of the fundamental principles of advocacy is determining how the information we have in advocates can play into the decision-making process, how are we relevant to them? Donovan said. “It’s part of what we’re trying to do before the G20, to show how much these standards impact us … That’s why the G20 language on financial inclusion and proportionality is important, it really represents the global community coming together to say that – universal regulation is counterproductive for financial inclusion.

“The more we can get these international standard setters – in this case the G20 – to endorse this idea of ​​proportionality, the more likely we are that our regulators and legislators implement proportional regulations,” he added.

Donovan said that, consciously or unconsciously, U.S. regulators such as the Treasury, the Consumer Financial Protection Bureau (CFPB), and the NCUA are taking inspiration from the global regulatory community and applying these standards to the entities they regulate.

“These global regulators are primarily concerned with preventing another financial crisis,” Donovan said. “This is why it is so important for the World Council and its members to advocate, to get our message to standard setters and policy makers, because they care less about the effects on small national cooperatives, and it is a huge burden for us to overcome at the international level. “

Donovan added that US credit union regulators have taken notice of the requirements of banking regulators and have tried to apply similar standards to credit unions in many cases.

“Our goal is to get them to adapt their rules to the size and risk profile of credit unions… We can highlight the differences in motivation. Banks are for-profit and their customers are one way to do it, ”he said. “As a credit union, the member is the reason the credit union exists. As a result, credit unions use a much less risky model than banks, and that’s important.

The full webinar is available on the World Board’s YouTube page or can be viewed below.


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