WASHINGTON–The Independent Community Bankers of America said it will “vigorously oppose” efforts by NCUA to expand the ability of credit unions to make member business loans.
In the wake of NCUA’s recent board meeting at which approval was given to make a number of changes to MBL-related regulations, ICBA President and CEO Camden R. Fine saying it will “vigorously oppose the tax-subsidized credit union industry’s campaign to extend its government-funded competitive advantage over taxpaying community banks. Congress enacted credit unions’ business-lending caps for good reason—to limit risky lending and to restrict these tax-exempt institutions to their fundamental mandate of serving people of modest means.”
Fine said the NCUA proposal will only “widen federal, state and local budget deficits and increase risks to our financial system.” He called the move by NCUA “basically an admission of the weak oversight and regulatory standards now in effect for credit unions. Requiring credit unions to implement credit policies and risk-weight loans, which have been standard practices for community banks for decades, leads one to ask, ‘Where have the credit union industry and its regulators been?’”
Fine said that if NCUA is going to allow expanded MBL authority, ICBA “assumes that the agency is also going to require credit unions to adhere to Community Reinvestment Act (CRA) statutes as all other financial institutions are required to do. Otherwise, widespread ‘redlining’ could go unchecked within the credit union industry.”\
NAFCU Responds
In response to the ICBA statement, NAFCU VP-Legislative Affairs Brad Thaler sent a message to members of Congress that NAFCU said aims to “debunk” the bankers’ claims.
Thaler said NAFCU has long-championed relief from the “arbitrary and outdated member business lending cap for credit unions,” and that is strongly supports several bills before Congress that would provide that relief.
Thaler said the recent banker attacks demonstrate their lack of understanding of credit union member business lending, and took issue with several of the ICBA assertions.
"It is important to note that despite the banker claims, the proposal would still require credit unions to have a board approved general and commercial lending policy,” Thaler wrote. “What the proposal would do is eliminate the unnecessarily bureaucratic waiver process under which credit unions are required to seek NCUA approval for basic and routine lending decisions - an important element of relief for credit unions and small businesses.”