ABA President and CEO Frank Keating in an op-ed this morning in The Hill noted that -- in addition to being exempt from taxes -- credit unions enjoy a “compliant federal regulator that often acts like a cheerleader for the industry it is supposed to be supervising.”
Keating challenged NCUA’s proposed member business lending rule, which he called an “unjustified giveaway to the largest credit unions -- those with more than $500 million in assets, which account for 76 percent of all CU business loans.”
He also pointed out that NCUA’s longstanding effort to dilute credit union membership requirements makes a mockery of the statutory cap on member business loans. “When credit unions have so-called common bonds like ‘lives in Washington State,’ or when they advertise that ‘anyone can join,’ or when they use Potemkin ‘associations’ to sign up virtually anyone as a customer, membership ceases to be a meaningful requirement,” he wrote.
“If NCUA gets away with further eroding the already tenuous limits on member business lending, it will eliminate another distinction between credit unions and banks—and further undermine credit union lobbyists’ argument that they should pay no federal taxes,” Keating concluded. “The credit union industry should perhaps be careful what it wishes for.”
Keating urges lawmakers to insist that NCUA follow the law.
Read the op ed.
The Op-Ed is so devoid of logic and reason, I do not even know where to begin. Most of the proposed changes in the rule concern Loan To Value restrictions, personal guarantees, and limitations on construction and development loans. There is nothing in law or included in HR1151 that addressed these areas. They are regulatory limits imposed by the NCUA and the NCUA like every other regulatory agency adjust its regulations from time to time. The Op-Ed makes it appear as though the NCUA is adjusting or ignoring the cap and that is false. Finally, the Op-Ed appears to make the case that competition and availability of credit for small businesses is not ideal if it is coming from credit unions. A vibrant economy depends on a healthy small business credit market regardless of where it comes from. SMH!
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