WOCCU goes to Russia to prep credit unions for new regulations.
Because the Russian league is a member of the World Council of Credit Unions, a multinational WOCCU delegation traveled to Russia the first week in February to assist RCUL members with the transition.
WOCCU Executive Vice President/Chief Operating Officer Brian Branch called the new regulations "both good and bad." He praised new financial standards that strengthen capital requirements and restrict concentration limits in investments, loans and deposits, saying they will boost public confidence in credit unions.
Branch said U.S. credit unions often ask WOCCU why the development organization supports stricter credit union supervision.
"Very often, there is not enough regulation and supervision," he said of developing credit union systems like Russia's. "This is a case where Russian credit unions are moving from no supervision at all and poor legislation to a more open system that will allow them to grow with the proper supervision in place."
Legislation prior to 2009 limited credit unions to no more than 2,000 members. The new law no longer limits the size of membership, although credit unions that serve more than 5,000 members are subject to double the reporting duties, he said.
On the downside, Branch said a requirement to create self-regulatory organizations is already resulting in what he called "regulator arbitrage," saying a similar framework has already been attempted and abandoned in Mexico. Because credit unions are tasked with forming their own SROs, the cooperatives tend to shop the SRO that will present the easiest regulatory oversight.
"Bigger credit unions will find a few smaller credit unions to join with them, so they can have their own organization to dominate," he said.
SROs must register and regularly report each credit union's financial condition to the Russian Ministry of Finance. There is an August 2011 deadline to form and affiliate with SROs.
The WOCCU delegation's role during its visit was to provide input and offer guidance in support of the SRO and other regulatory standards.
In addition to Branch, the delegation included Anne Cochran, president and CEO of the Louisiana Credit Union League, Alan Moore, executive director of the Irish League of Credit Unions Foundation, and Pawel Grzesik, a representative of the Polish Credit Union Foundation.
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|Publication:||Credit Union Times|
|Date:||Feb 24, 2010|
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