Thursday, December 12, 2013

Article Exposes Cozy Relationship Between CU Regulator and Industry

An investigative report by Daniel Wagner, senior reporter for The Center for Public Integrity, exposes the cozy relationship between the National Credit Union Administration (NCUA) and the credit union industry.

The article begins with the newest NCUA Board member, Rick Metsger, attending a luncheon in his honor at Credit Union House, a $4 million party and meeting space on Capitol Hill funded by the industry, shortly after being sworn into office. The event was attended by credit union regulators, leaders, and advocates toasting "one of their own, a fellow-true believer in credit unions who would now police the industry full-time."

The article highlighted the clubby world of the credit union movement where the regulators are ideologically in sync with the companies they regulate. This results in NCUA often acting as a cheerleader and enabler for the credit union industry.

For example, it was NCUA policies at the behest of the credit union lobby that led to the failure of five corporate credit unions requiring a $19.2 billion bailout of the industry.

This coziness between the regulator and the regulated in part arises from the revolving door between NCUA and credit union movement, as all three current NCUA Board members worked in or represented the industry. Wagner wrote: "There are no meaningful safeguards to prevent the NCUA from being completely filled with the industry veterans and allies."

In addition, Wagner points out that credit unions have erected a sprawling advocacy machine to protect their tax exemption, which is funded at the expense of credit union members to the tune of more than $100 million per year.

Read the article.

No comments:

Post a Comment


The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.