Tremont Credit Union Under LUA

The National Credit Union Administration (NCUA) and the Commonwealth of Massachusetts Division of Banks have jointly issued a Letter of Understanding and Agreement (LUA) to the officials of Tremont Credit Union, Braintree, Massachusetts, in order to restore the credit union to safe and sound operation.

The LUA cites the $179 million credit union for various adverse conditions, including:

1. Insider abuse and self-dealing;
2. Poor loan quality;
3. Inadequate internal controls;
4. Deficient earnings; and
5. Weak management.

Regulatory Forbearance

The NCUA Board on April 29 voted to extend a waiver permitting corporate credit unions to continue using their November 30, 2008, capital level to determine regulatory compliance with capital-based requirements and limitations in NCUA's corporate credit union regulations.

NCUA’s decision to provide regulatory forbearance deals with the fact that several provisions setting regulatory limits and requirements are based on corporate credit union capital. The capital positions of corporate credit unions have been severely impaired by losses from mortgage-backed security investments and equity investments in U.S. Central. To ensure uninterrupted service to natural person credit unions, NCUA is permitting corporate credit unions to operate with their capital levels reported on November 30, 2008.

The NCUA Board also established a new termination date for the extansion of the waiver, which is one year after the final corporate credit union rule is published in the Federal Register. So, NCUA will engage in regulatory forbearance for at least another year.

The following two tables report the core capital and total capital ratios for corporate credit unions as of November 30, 2008 and January 31, 2010 (click on images to enlarge).

NCUA Liquidates Tracy FCU, Valley First Assumes Assets and Shares

The National Credit Union Administration (NCUA) liquidated Tracy Federal Credit Union (Tracy FCU) of Tracy, California. Valley First Credit Union purchased and assumed Tracy FCU’s assets, loans and shares.

On March 19th, NCUA placed Tracy FCU into conservatorship. Tracy FCU’s declining financial condition led to its closure and subsequent purchase and assumption. At closure, Tracy FCU had $25.4 million in assets and served 5,973 members.

This is the sixth credit union to be liquidated in 2010 and the third in California.

Credit Unions with the Most Delinquent Business Loans

As credit unions have grown their business loan portfolios, they have also increased the amount of risk they are assuming. And the recession has taken a toll on some of these credit unions’ business loan portfolios.

Data show that delinquent business loans (member and non-member) are highly concentrated. A business loan is defined as being delinquent if it is 2 months or more past due.

Sixty-nine credit unions at the end of 2009 were responsible for three-fourth of all delinquent business loans, although they held less than one-third of the industry’s business loans. The twenty-five credit unions with the most delinquent business loans reported $668.5 million in past due business loans – representing 55 percent of all delinquent business loans at credit unions. These credit unions only accounted for 19 percent of all business loans reported by credit unions.

The credit union with the largest portfolio of past due business loans is America First in Utah with $150 million. In second place is Texans CU with $95 million in past due business loans.

The following table lists the 25 credit unions with the largest amount of delinquent business loans (click on image to enlarge).

St. Paul Croatian FCU Placed into Conservatorship

The National Credit Union Administration assumed control of the operations of St. Paul Croatian Federal Credit Union (charter number 5049), headquartered in Eastlake, Ohio. This is the second credit union to be conserved in 2010.

The credit union has approximately $238.8 million in assets and almost 5,400 members.

The March 2010 Financial Performance Report, which can be downloaded from the NCUA's website, showed that in December 2009 the credit union had zero delinquent loans. By March 31, 2010, the credit union reported almost $10.4 million loans as 60 days delinquent (or 4.32 percent of its loans). In addition, $77 million in loans were 1 to 2 months delinquent.

Prepare for More Regulatory Reporting Burdens

The Senate is preparing to vote next week on legislation (S. 3217, the Restoring American Financial Stability Act of 2010) that will expand the regulatory burdens on banks and credit unions.

I would like to focus just on two new data collection regulatory burdens. S. 3217 will authorize the proposed Consumer Financial Protection Bureau (CFPB) to impose new costly reporting requirements regarding deposits and small business loans. A similar reporting requirement has already passed the House of Representatives.

First, Section 1071(b) of the bill would mandate new disclosures regarding deposit accounts. Every bank and credit union is to maintain records of the number and dollar amount of the deposit accounts of its customers, for all branches, ATMs, and other deposit-gathering facilities. Customer addresses are to be geo-coded and identified as a residential or commercial customer. Every bank and credit union also is to make annual disclosures, for each branch, ATM, or other facility, regarding the type of deposit account (including whether it is a checking or savings account) and data on the number and dollar amount of all accounts, by census tract of the customer.

Second, Section 1072 of the bill imposes new reporting burdens on small business loans. Every bank and credit union, when it receives a loan application from a small business, must ask the applicant whether it is women- or minority-owned. The financial institution is to maintain this information separately from the application file and the loan underwriter. If the bank or credit union determines that the underwriter should have access to the information, the bank or credit union is to tell the customer that the underwriter has access to it. Banks and credit unions are to itemize each loan according to the following criteria plus anything else the CFPB thinks is appropriate.

(A) the number of the application and the date on which the application was received;

(B) the type and purpose of the loan or other credit being applied for;

(C) the amount of the credit or credit limit applied for, and the amount of the credit transaction or the credit limit approved for such applicant;

(D) the type of action taken with respect to such application, and the date of such action;

(E) the census tract in which is located the principal place of business of the small business loan applicant;

(F) the gross annual revenue of the business in the last fiscal year of the small business loan applicant preceding the date of the application; and

(G) the race and ethnicity of the principal owners of the business.

Once again, this info is to be publicly available.

What do these new reporting burdens have to do with the financial crisis? Nothing.

Fifty CUs with Largest CRE Loan Portfolios

At the end of 2009, federally-insured credit unions held approximately $27.6 billion in commercial real estate (CRE) loans. CRE loans accounted for almost 80 percent of all credit union business loans.

Below is a table showing the 50 credit unions with the largest CRE loan portfolios as of December 2009. The table also includes information on CRE loans as a percent of the credit union's net worth, which provides a measure of concentration risk at the credit union to commercial real estate (click to enlarge image).

Evangelical Christian CU (CA) held the top ranking and reported holding slightly more than $1 billion in commercial real estate loans at the end of 2009. Rounding out the top 5 are America First (UT) with $541 million in CRE loans, San Diego County (CA) with $469 million in CRE loans, Kinecta (CA) with almost $400 million in commercial mortgages, and Patelco (CA) with $381 million in CRE loans.

Air Force FCU Cited for Improper Membership

NCUA cited Air Force FCU (San Antonio, TX) for improperly adding individuals to the credit union’s membership rolls who were not in its field of membership. NCUA discovered the improper membership during its investigation of the credit union's application to add an underserved area.

The Letter of Understanding and Agreement (LUA) from November 18, 2009 stated:

"The Credit Union previously took an overly expansive view of their field of membership ... As a result, it has accepted share accounts from, and extended loans to, individuals otherwise unqualified for membership, which has had a direct effect on the Credit Union's rapid growth and accounts for a significant percentage of its shares and its loan portfolio. These actions have led to our present supervisory concerns about operations and management."

NCUA states that the credit union between 2002 and 2009 performed inadequate inquiry during the application process as to whether the members qualified for membership. The

Under the LUA, the credit union has agreed to:

1. accurately complete applications for all new members, which must include documentation of how the new member qualifies for membership.

2. submit a resolution that the credit union will limit membership to the 18 groups in its official field of membership.

3. provide the NCUA Regional Director a trial balance of the total loans and shares held by unqualified members.

4. retain the services of an outside audit firm, which will analyze the Credit Union's loans held by unqualified members. This analysis would include "the present value of all loans made to unqualified members and the financial impact that a distress sale ... of these loans would have on the Credit Union.

5. notify its bond insurer, CUNA Mutual Group’s CUMIS, of the addition of members ineligible to join.

6. divest itself of all loans and shares attributable to unqualified members, if so directed by NCUA after reviewing the audir results.

Under the supervisory agreement, NCUA agreed not take formal administrative action against the credit union as long as it makes a good faith effort to comply with the terms of the Agreement.

I'll be interested to see, if NCUA requires the credit union to divest the loans and share accounts of unqualified members.

Excessive Concentration in Risky HELOCs Contributed to Cal State 9 CU's Failure

NCUA’s Inspector General (IG) issued a report on the failure of Cal State 9 Credit Union. Cal State 9 CU failed because credit union officials had inadequate risk management practices to address credit, concentration, and liquidity risks that arose from the credit union’s indirect subprime home equity line of credit (HELOC) program.

Cal State 9 CU was placed into conservatorship on November 2, 2007. In April 2008, NCUA accepted bids from credit unions that were interested in acquiring Cal State 9. NCUA liquidated Cal State 9 on June 30, 2008 and executed a purchase and assumption agreement with Patelco CU. The cost of this failure to the NCUSIF is estimated at approximately $206 million.

In May 2003, Cal State 9 started an indirect HELOC program with a third-party mortgage broker. The IG concluded that Cal State 9 CU’s HELOC program experienced explosive growth – expanding from $4.6 million in March of 2003 to $357 million in June 2007, when the credit union was placed under NCUA’s Special Actions. As of June 2007, 92 percent of its loan portfolio and 80 percent of its assets were in HELOCs.

Weak underwriting standards of the HELOC program increased the level of credit risk at Cal State 9. Cal State 9 had the right of first refusal on each HELOC presented by its third-party broker. According to the IG report substantially all of the HELOCs funded by Cal State 9 had elements of subprime loans including, stated income loans, high combined loan to value ratios, borrowers with low credit scores, and junior positions behind negative amortization first-lien mortgages.

In June 2006, stated income loans made up 88 percent of the HELOC portfolio. Borrowers with credit scores between 600 and 639 and below 600 accounted for 28 percent and 18 percent of the portfolio, respectively. Sixty-one percent of the loans were junior to negative amortization first mortgages.

Additionally, the IG report faulted the compensation practice of the indirect HELOC program. The credit union’s CFO was the sole person responsible for operations of the indirect HELOC program. The CFO was compensated on the additional net income generated by the program and received almost $400,000 in bonuses between 2006 and 2007. The IG report wrote “this individual had no incentive to ensure the credit union had an effective quality control system in place because any loan turned down from the broker would, in effect, take money directly from his bonus.”

The report also faults management at the credit union for not managing liquidity risk. Management “sold participations, liquidated investments, borrowed funds, and increased dividend rates to attract shares in order to meet liquidity needs.”

For example, three credit unions and one bank bought non-recourse participations from Cal State 9 worth $190 million. The credit union set up a line of credit for $90 million with Western Corporate FCU and the credit union borrowed almost $61 million to fund its HELOC program.

However, the report cites that the liquidity problems of Cal State 9 were made worse in 2007, when Western Corporate FCU reduced its line of credit from $90 million to $25 million. To attract funds, the credit union Started offering high rate share certificates. But this hot money left the credit union as soon as the rates were lowered.

Cal State 9 CU’s appetite for growth, concentration in subprime HELOCs, and lax internal controls coupled with the collapse in the California real estate market assured the demise of this credit union.

Gilding the Books

Jim McTague in Barrons (subscription required) writes about the creative accounting that has allowed corporate credit unions to pretend "their capital cushions are as fat as they were back in November 2008, before their portfolios of mortgage-backed securities blew up. In reality, most are either broke or barely capitalized. The system is held together by rubber bands."

Since NCUA hasn't produced an audited annual report for 2008 or 2009, it is nearly impossible to know how large the losses are in the credit union system. The article cites estimates of $6 billion to $18 billion.

Fact Checking Business Lending Legislation Ad

The Texas Credit Union League ran an ad in Roll Call calling for the member business lending (MBL) cap be lifted. The ad asks the following question: "Will Congress help small businesses get access to capital?" and focuses on the story of bagel shop owner Suzanne Herman. She was not able to get financing until she got an Small Business Administration's (SBA) Patriot Express loan from Randolph-Brooks.

However, this ad selectively neglects to mention some other facts.

First, the ad neglects to point out that the guaranteed portion of an SBA loan does not count against the aggregate business loan cap.

Second, Randolph-Brooks FCU, which originated the business loan, is no where near the aggregate business loan cap. The credit union has $154.3 million in business loans and $3.75 billion in assets. This translates into a member business loan to asset ratio of 4.11 percent, which is well below the aggregate member business loan cap of 12.25 percent of assets.

So, what this tells me is that there is no need for Congress to act. This credit union has plenty of options to meet the credit needs of its small business customers.

NCRC: CRA for Credit Unions

Testifying before the House Subcommittee on Financial Institutions and Consumer Credit on the Community Reinvestment Act (CRA), John Taylor, President of the National Community Reinvestment Coalition (NCRC), called on Congress to apply CRA to credit unions, as well as to other non-CRA covered entities.

In his testimony, Mr. Taylor said that credit unions have not satisfactorily served minority and working communities, thereby reducing the level of responsible loans in traditionally underserved markets.

Citing a study released last year by NCRC, Mr. Taylor states that “credit unions, which have a statutory duty to serve people of “small means,” issue lower percentages of home loans than banks to minorities, women, and low- and moderate-income communities.”

"NCRC analyzed banks’ and credit unions’ performance on three lending types: home purchase, refinance, and home improvement. Across the three loan types, banks and credit unions were assessed on 69 performance measures scrutinizing: 1) the percent of loans to various groups of borrowers, 2) denial rates confronted by minority compared to white borrowers and lower income compared to upper income borrowers, and 3) approval rates experienced by borrowers. In 2007, banks outperformed credit unions on 44 of the 69 performance indicators (or 64 percent of the time). Credit unions surpassed banks performance only 7 percent of the time, while banks and credit unions performed equally well almost 30 percent of the time. In 2006 and 2005, banks performed better than credit unions on 65 percent of the indicators."

He also pointed out that the NCRC study found that state chartered credit unions in Massachusetts, which are subject to a state CRA requirement, outperformed federal credit unions in Massachusetts in serving underserved communities in Massachusetts.

In his testimony, he states that "mainstream credit unions clearly have the assets, resources, and geographic reach to serve minorities, women, and low- and moderate-income communities."

Mortgage Recording Tax

Arguments are scheduled to be heard today in the New York Supreme Court over whether federal credit unions operating in New York are exempt from the state's mortgage recording tax.

New York assesses two mortgage recording taxes -- a regular mortgage recording tax that is paid by the borrower and a "special additional mortgage recording tax" that is paid by the lending institution

According to the New York Times, Hudson Valley Federal Credit Union, in Poughkeepsie, N.Y., is suing the state of New York. The credit union contends that New York State forced the credit union to collect the recording tax, despite its tax-exempt status. Hudson Valley Federal Credit Union is seeking a refund of all of the special additional mortgage recording taxes paid prior to the Tax Department's ruling that the credit union is exempt from the tax.

The complaint states that Hudson Valley FCU and other federal credit unions, as instrumentalities of the United States government, are afforded immunity from taxation under the Supremacy Clause of the United States Constitution in that a state cannot tax an instrumentality of the United States government without the express authorization of Congress. The U.S. Justice Department filed a brief supporting the federal credit union.

However, the New York Times wrote that:

The state maintains that it has not violated the tenets of the Federal Credit Union Act of 1934, which stipulates that credit unions “shall be exempt from all taxation,” except on real and tangible personal property. The tax, the state says, is not on the credit union or on mortgages but for the privilege of recording a mortgage.

A decision is expected in about 6 weeks.

If the credit union wins the case, the state of New York could lose millions of dollars of revenue.

NCUA Issues White Paper on Supplemental Capital

NCUA’s Supplemental Capital Working Group (the Working Group) issued a White Paper on supplemental or secondary capital for credit unions.

The White Paper states that credit unions rely almost exclusively on retained earnings to build capital. Currently, only two types of credit unions can issue supplemental capital – low-income credit unions and corporate credit unions. Congress in 1998 limited credit union net worth to retained earnings as defined by generally accepted accounting principles. Therefore, the Federal Credit Union Act would have to be amended to allow federally-insured credit unions to count supplemental capital as part of their net worth.

“The Working Group concluded that any form of supplemental capital for credit unions should adhere to three key public policy principles: (1) preservation of the cooperative mutual credit union model; (2) robust investor safeguards; and (3) prudential safety and soundness requirements.”

There are two important characteristics associated with supplemental capital – 1) the source of supplemental capital and 2) the equity characteristics of the supplemental capital.

The Working Group identified three alternative forms of supplemental capital that meet the aforementioned principles – Voluntary Patronage Capital (VPC), Mandatory Membership Capital (MMC), and Subordinated Debt (SD).

“ VPC would be uninsured and subordinate to the National Credit Union Share Insurance Fund (NCUSIF), and would be used to cover losses that exceed retained earnings. These instruments are intended to allow members with the financial wherewithal, under strict suitability and disclosure standards, to support the credit union by contributing capital. Purchase of this type of supplemental capital instrument would be optional for natural person members, but not available to institutional members. Voting rights and access to all credit union services otherwise available to members may not be contingent in any way on the purchase of VPC. This type of supplemental capital would function as equity, not debt, as it is a very long term, noncumulative capital instrument. Given its utility as capital, VPC would count toward both the net worth ratio and the risk-based net worth ratio, but subject to certain limits given mutuality and risk considerations.

MMC would function as equity, not debt, as it approximates a perpetual, non-cumulative capital instrument. Purchase of this type of supplemental capital would be a condition of membership for any person or entity eligible to join the credit union. The idea behind this form of capital is to allow credit unions to convert the par value share currently required to be a member of the credit union in good standing to a form of supplemental capital. Specifically, the minimum single par share which a member is required to “purchase” to be a member of the credit union would be uninsured and subordinate to the NCUSIF. Subject to prior regulatory approval, individual credit unions would opt-in to this type of membership structure by adoption of a standard bylaw amendment.

Given its utility as capital, MMC would count without limit toward both the net worth ratio and the risk-based net worth ratio. It is intended to reflect the cooperative “ownership” and voting rights every member of the credit union has, without changing the one member-one vote principle. It more explicitly reflects each member’s ownership stake in the credit union.

SD is the third general category that could satisfy to various degrees the key public policy principles. SD would be uninsured, subordinate to the NCUSIF, and would be used to cover losses that exceed retained earnings and any MMC or VPC capital. It would have a 5-year minimum initial maturity or notice period with no early redemption option for the investor. Credit unions issuing SD would need to be subject to standard marketplace investor suitability standards and disclosures. SD may not convey any voting rights, involvement in the management and affairs of the credit union, or be conditioned on prescriptive measures directing the credit union’s business strategies. This type of supplemental capital would function as a hybrid debt-equity instrument. It is the Working Group’s belief that this type of capital instrument should be limited to institutional investors, regardless of whether such investors are members of the credit union or external. Given the debt characteristics and shorter minimum initial maturity, SD would only count toward the risk-based net worth ratio, and only up to 50% of capital instruments (including retained earnings) counting toward the net worth ratio.”

Matz: If NCUA Had Not Acted, Corporate CU Crisis Would Have Been Catastrophic

In a speech to the Texas Credit Union League on April 8, NCUA Chairman Debbie Matz told the audience of credit union officials that if numerous actions to address the corporate credit union crisis had not been taken, the credit union industry would have faced grave systemic risk.

Ms. Matz said:

“About 90 percent of natural-person credit unions had investments in the corporates. If the corporate system had collapsed, the natural-person-credit-union system would have suffered huge and insurmountable losses – shattering confidence in all of America’s credit unions. Since they had such large investments in the corporates, credit unions would have lost about $30 billion in net worth – about one-third of the net worth of all natural-person credit unions at the time. That would have led to the collapse of at least 800 – perhaps as many as 1,200 – natural-person credit unions.

In addition, the federal Share Insurance Fund would have had to levy huge assessments on the remaining credit unions, in order to cover the remainder of the losses. It is uncertain whether those remaining credit unions could have withstood the strain. They would have been facing enormous costs in terms of capital, along with a catastrophic loss of public confidence.”

Below are some of the extraordinary governmental actions that have been taken to keep corporate credit union crisis from becoming a systemic crisis for all credit unions:

• Encouraging corporate credit unions with large unrealized losses on holdings of mortgage backed securities (MBS) to make application to the Federal Reserve Discount Window.

• Converting loans made by corporate credit unions to natural person credit unions to Central Liquidity Facility (CLF)-funded loans using funds borrowed by the CLF from the U.S. Treasury.

• Announcing and implementing the Temporary Corporate Credit Union Liquidity Guarantee Program (TCCULGP) on October 16, 2008. The TCCULGP provides a 100 percent guarantee on certain new unsecured debt obligations issued by eligible corporate credit unions.

• Announcing and implementing the Credit Union System Investment Program (CU SIP) and the Credit Union Homeowners Affordability Relief Program (CU HARP).

• Approved issuance of a $1 billion NCUSIF capital note to U.S. Central as a result of pending realized losses on MBS and other asset-backed securities.

• Approved the Temporary Corporate Credit Union Share Guarantee Program (TCCUSGP), which guarantees uninsured shares at participating corporate credit unions through June 30, 2012.

• Legislation creating a Temporary Corporate Credit Union Stabilization Fund (CCUSF), which would borrow money from the Treasury for up to seven years and use the money to pay expenses associated with the ongoing problems in the corporate credit union system.

Director Liability

In a letter to the editor of Credit Union Times in the March 24, 2010 issue, Henry Wirz, President of SAFE Credit Union, objected to credit union directors’ exposure to personal liability. He wrote:

“Bob Fenner [NCUA’s General Counsel] opined that the WesCorp board of directors has no indemnity. What does that mean? It means that all of our volunteers who claim indemnity under a board resolution (that is most of our volunteers) have no indemnity. That means whenever the NCUA comes in and takes over a credit union that any board member loses his indemnity and has to dig into his own pockets to defend himself.”

He worries that if “directors do not have indemnity, then who will serve?”

Henry, welcome to the world that bank directors have lived under for the last twenty years. Bank directors can be held personally liable for losses when a bank fails. FDIC writes that “[l]awsuits against former directors and officers of failed banks result from a demonstrated failure to satisfy the duties of loyalty and care.” See FDIC’s Statement Concerning the Responsibilities of Bank Directors and Officers.

Credit Insurance and AD&D Not Subject to UBIT

The U.S. District Court for the District of Colorado ruled that Bellco Credit Union is not liable for unrelated business income taxes (UBIT) paid on revenues earned from the sale of credit life and credit disability insurance and accidental death and dismemberment (AD&D) insurance.

Bellco CU was seeking a refund of $199,293 for taxes paid in 2000, 2001, and 2003.

In the Bellco CU case, the court found that credit life and credit disability insurance is related to a credit union’s exempt purpose of “promoting thrift” to its members. This ruling comes eight months after another federal court in Wisconsin found that Community First CU was not liable for UBIT on credit life products.

The court also found that Bellco is exempt from UBIT on AD&D insurance it offered through a third-party provider, Affinion. The Court found that revenues earned on the insurance amounted to royalties paid by Affinion and the Internal Revenue Code expressly excludes royalty income from UBIT.

However, Judge Christine M. Arguello did find that Bellco Credit Union was liable for UBIT on its share of the profits from its membership in an indirect lending association with other credit unions, Credit Union Indirect Lending Association (CUILA).

Only state chartered credit unions are subject to UBIT.

NCUA Misses Another Deadline

Another April 1st has passed and NCUA has once again missed its deadline for publishing its Annual Report.

The Federal Credit Union Act states that “[n]ot later than April 1 of each calendar year, and at such other times as the Congress shall determine, the Board shall make a report to the President and to the Congress. Such a report shall summarize the operations of the Administration and set forth such information as is necessary for the Congress to review the financial program approved by the Board.”

I’m not talking about its 2009 Annual Report. We are still waiting for NCUA to publish its 2008 Annual Report.

It is more than one year late.

If the NCUA Board cannot meet this simple deadline, how can it be expected to handle the added responsibility of regulating an increase in credit union business lending authority?

NCUA's Disclosures for Credit Unions Switching to a Mutual Bank Charter (Part I)

NCUA has had a history of prescribing how credit unions should communicate to their members regarding the issue of charter choice. However, these disclosures are speculative and misleading.

One example of a speculative and misleading disclosure is where NCUA requires a credit union that seeks a mutual savings bank charter to disclose that if a credit union switches to a mutual savings bank charter, some types of consumer loans would be less available. The goal is to frighten credit union members to oppose the change in charter.

According to NCUA’s regulations (Section 708a.1040), the agency requires “a clear and conspicuous disclosure of how the conversion from a credit union to a mutual savings bank will affect the institution’s ability to make non-housing-related consumer loans because of a mutual savings bank’s obligations to satisfy certain lending requirements as a mutual savings bank. This disclosure should specify possible reductions in some kinds of loans to members.”

First, let me set the record straight on the consumer lending authority for federal savings associations. Federal savings associations have no statutory limitations with respect to credit card loans and can make non-credit card consumer loans up to 35 percent of their assets.

Second, looking at the year-end financials for all federally-insured credit unions, I found that non-housing-related consumer loans, excluding credit cards, were only about 26 percent of all assets for federally-insured credit unions. This would suggest that a number of credit unions have already self selected not to make non-housing-related consumer loans. So, the member would not necessarily experience a reduction in non-housing-related consumer loans.

Unfortunately, NCUA’s one-size-fits-all required disclosures cause confusion, so who is misleading whom?