Jan 01 2003

The Future of Credit Unions: Public Policy Issues

Report  
Number  
87

This report provides a look into financial institution law and regulations and the need for regulatory parity among depository instead.

William E. Jackson, III
University of North Carolina-Chapel Hill
Report Number 87

Executive Summary

Over the past twenty years, Congress relaxed or eliminated many of the regulations imposed upon depository institutions. These actions responded to the impact of significant technological, competitive, and other market changes encountered by those institutions. Federal Reserve Board Chair Alan Greenspan recognized the positive effect deregulation offers consumers when he said deregulation provides “financial services at lower prices, increased access, and higher quality services that accompany the increased competition associated with permitting depository institutions to expand their activities.”

Credit unions benefited far less from deregulation than commercial banks and thrifts. While the same factors that supported the deregulation of commercial banks and thrifts also support deregulation of credit unions, credit union powers were largely unchanged during the past twenty years.

What is the research about?

In his study, Professor Jackson shows why credit unions deserve to share in the deregulation already afforded commercial banks and thrifts. Good public policy, he notes, demands a change in regulatory framework whenever the costs of regulatory restrictions exceed their benefits.

What are the credit union implications?

The regulation of credit unions ought to provide as much consumer choice as possible by promoting a competitive and innovative financial marketplace, while insuring a safe and sound financial system. Deregulatory legislation has not gone far enough in eliminating the restrictions limiting credit unions’ ability to provide products and services that their members and potential members deserve