WASHINGTON–The Independent Community Bankers of America (ICBA) wants Congress to investigate what it is calling the National Credit Union Administration's “failure to prevent credit union lending abuses.”
In letters to the Senate Banking and House Financial Services committees, ICBA pointed to what it said was NCUA's role in the taxi medallion “scandal” as reported by the New York Times and CUToday.info here.
In a statement, ICBA said “irresponsible lending dominated by half a dozen credit unions led to financial ruin for thousands of families as well as a spate of tragic taxi driver suicides.”
The ICBA letters do not note that a number of banks were also involved in making taxi medallion loans.
‘NCUA Was Deaf’
"At the root of this fiasco is a failure of the NCUA to regulate and supervise," ICBA President and CEO Rebeca Romero Rainey wrote. "Lending concentration, abusive loan terms, and medallion prices inflated well above their fundamental value were obvious to industry observers, but the NCUA was deaf to the many warnings it received from the outside as well as from within the agency. In The New York Times series, one observer said the NCUA is more of trade group than a regulator, further demonstrating that the agency clearly was and remains captured by the credit union industry."
The bankers’ group said it wants congressional committees to convene hearings at their earliest convenience to explore the role of the NCUA in “this scandal. A congressional investigation is urgently needed to induce the NCUA to keep an arm’s length from the tax-exempt industry it is charged with regulating, strengthen its oversight, and prevent future abuses.”
The ICBA letters cite the $750-million in losses to the National Credit Union Share Insurance Fund from failed taxi medallion loans.
Long Time Concerns
ICBA noted that the taxi medallion scandal led to $750 million in losses to the taxpayer-backed National Credit Union Share Insurance Fund.
“ICBA and community banks have long raised concerns about the NCUA’s regulatory capture and the competitive advantage it confers on an industry whose tax exemption is worth an annual cost to taxpayers of nearly $2 billion and rising,” the ICBA said. “With many large credit unions increasing their taxpayer-subsidized footprint by buying up smaller, taxpaying community banks, ICBA will continue calling on policymakers to re-examine the credit union industry’s tax and regulatory subsidies and the NCUA’s efforts to drastically increase the powers of tax-exempt credit unions beyond their statutory limits.”