WASHINGTON–The American Bankers Association continues its stepped-up pressure on credit unions.
In a letter to the National Credit Union Administration board and inspector general, the ABA has called for a “top-to-bottom assessment” of what it said is the question of whether the credit union industry is “living up to its statutory mandate to operate not-for-profit and serve people of small means.’
The letter to NCUA follows an ABA-sponsored study that argues CU members are disproportionately from middle- and upper-income households and credit unions’ lack of “mission compliance” deepens U.S. economic inequality. CUToday.info has full coverage of the NCUA report here.
“Among Petrou’s findings was a need for NCUA to impose mission-related requirements,” the ABA said in a statement accompanying its letter. “The report noted that the modern credit union regulatory framework has allowed the credit union business model to transform into one often indistinguishable from banks, with no significant mandate (akin to the Community Reinvestment Act regulations with which banks must comply) to serve low- to moderate-income households.”
What ABA Wants
In its letter to NCUA, the ABA stated:
- NCUA needs to impose mission-related requirements
- The “provident or productive” mandate is all but ignored by NCUA regulation
- Credit union acquisitions of banks show a changed mission
- NCUA regulation and supervision is substandard and poses increasing risks to the credit union system
- NCUA’s definition of “low-income” is misleading, but carries consequences in the marketplace
‘Falling Short of Achieving Mission’
“No question, there are examples of credit unions that do an excellent job serving small means consumers, and would continue to make the Federal Credit Union Act’s original drafters proud,” said the ABA in its letter. “However, Petrou’s paper suggests that NCUA should be concerned that despite the unprecedented public subsidies and exemption from important bank-like regulations, many credit unions, particularly those of a larger nature, are simply falling short of achieving the mission intended 85 years ago.”