NCUA's Inconsistency on Disclosures

Sometimes I can only shake my head in disbelief over the actions of the NCUA.

On December 9, NCUA in testimony advocated for an increase in the business lending authority for credit unions, which means a possible reduction in consumer loans. Then on December 17, NCUA put in place mandatory disclosure rules regarding credit union conversions to a mutual savings bank or bank-credit union mergers requiring a clear and conspicuous disclosure of how the merger or conversion will affect the members’ ability to obtain non-housing-related consumer loans. This disclosure should specify possible reductions in some kinds of loans to members.

While NCUA is concerned that converting to a mutual savings bank or merging into a bank will mean less consumer loans, NCUA appears unconcerned that lifting the business loan cap will reduce the amount of consumer loans going to members.

Excuse me, but doesn't increasing the ability of credit unions to make more business loans relative to their assets mean that credit union members' ability to obtain non-housing-related consumer loans will be affected.

If NCUA really believes that it is important that members know that a conversion to a mutual savings bank or merger into a bank could possible cause a reduction in some kinds of loans, shouldn't NCUA require such a disclosure of credit unions if they plan to increase the percentage of their loan portfolio going to business loans?

Moreover, shouldn't the credit union receive the consent of the members before the credit union embarks on a business lending expansion?

After all, NCUA has openly stated that business lending is riskier than consumer lending. So, allowing credit unions to increase their concentration in business lending could materially impact the interest of credit union members.

Unfortunately, we have not heard a peep out of NCUA about such disclosures regarding an increase in business lending.

I suspect the real motive behind NCUA's disclosure requirement for credit union conversions to a mutual savings bank charter or a credit union merger into a bank is to prejudice the vote in these transactions.