Why is NCUA a voting member on FSOC?

by. Keith Leggett

The Dodd-Frank Act created the Financial Stability Oversight Council (FSOC). FSOC is made up of ten voting members and five nonvoting members.

But should the National Credit Union Administration (NCUA) be a voting member?

A report by the Bipartisan Policy Center to create a more effective regulatory architecture recommended making NCUA a non-voting member on the FSOC.

The report noted that “while it is useful to have representation on the FSOC from the NCUA, it makes little sense for the NCUA to have a vote equal to the Federal Reserve on all matters before the Council, particularly when the NCUA does not oversee a single institution that meets the criteria established by Congress or the FSOC as requiring enhanced supervision due to systemic importance.”

The report recommends that “[t]he chair of the NCUA should become a non-voting member. Credit unions are an important part of the U.S. financial system, but they generally are small and do not figure into macro-prudential discussions. To the extent they do, a credit union voice will still be represented on the FSOC, but without a vote.”

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