The World Council of Credit Unions generally supports the Financial Stability Board’s (FSB) proposal on ways to improve stability of too-big-to-fail banks, but urged the board to make several changes in the final version to reduce potential regulatory burdens on credit unions.

The FSB is the agency for maintaining global financial stability, the international version of the U.S.’s Financial Stability Oversight Council.

In its letter, the World Council urged the FSB to limit its proposed “bail-in” requirements to systemically important banks only, because some other FSB standards, such as stress testing, are sometimes applied to credit unions that are not systemically important to the financial system.

The World Council also:

• Argued that the FSB should respect credit unions’ cooperative structure and not require a change in the credit union’s ownership and control even in the event of a “bail-in;” since a change in a credit union’s ownership and control would require the credit union to demutualize and convert to a joint-stock bank;
   
• Urged the FSB allow supervisors and institutions the option to engage more than one valuation firm to value its assets;
   
• Argued that the FSB should not require community-based depository institutions to invest in computer programs that provide “highly granular” information about their assets and liabilities because these technology costs would not be a proportional regulatory burden for a credit union; and
   
• Cautioned that public communications by supervisors concerning troubled financial cooperatives should be carefully crafted so as not to cause a run on that institution or on other financial cooperatives.