BASEL, Switzerland—The World Council said it led an effort to persuade the Basel Committee on Banking Supervision to endorse proportionality, which allows national and regional financial regulators to prescribe compliance standards for credit unions that are less burdensome than those required by Basel III and other international financial regulatory standards.
Basel III is the global financial regulatory framework adopted by the Committee in response to the financial crisis of 2007-09 that aims to strengthen the regulation, supervision and risk management of banks.
According to WOCCU, its SVP and general counsel, Michael Edwards, and other credit union officials voiced their support for proportionality in a meeting with Basel Committee Deputy Secretary General Neil Esho, arguing credit unions should not face expensive compliance standards that were written for multi-national banks.
‘Less Expensive and Time Consuming’
“We support the Committee’s efforts to ensure the largest banks meet the capital and liquidity standards put in place by Basel III and other Basel Committee standards,” said Edwards. “But local jurisdictions should be encouraged to use their discretion to establish proportional regulations that are safe and sound, but less expensive and time-consuming for less-complex institutions such as credit unions,” said Edwards.
WOCCU said it was joined in making the case for proportionality to the Committee by Canadian Credit Union Association (CCUA) President and CEO Martha Durdin, Customer Owned Banking Association (COBA) President and CEO Mike Lawrence, and CUNA Chief Advocacy Officer Ryan Donovan.
CCUA, COBA and CUNA are all members of the World Council of Credit Unions.
Many Already Practice Proportionality
The recommendations from World Council of Credit Unions and its members come on the heels of a March 2019 report from the Committee that shows most national and regional regulators already apply some form of proportionality—especially related to capital and liquidity requirements. These generally take the form of a modified version of existing Basel standards, or an exemption from such requirements, WOCCU said.