CEO Worries that Some CUs Seeking Low-Income Designation for Wrong Reason

According to Credit Union Times, Todd Lane, CEO of California Coast Credit Union (San Diego, CA), is worried that some larger credit unions are seeking a low-income designation for the wrong reason.

Instead of serving low-income members, Lane believes that the real motivation of these credit unions to pursue a low-income designation is to circumvent the member business loan cap of 12.25 percent of assets. Low-income designated credit unions are exempt from the member business loan cap.

Speaking on a panel at the Southern California Credit Union Alliance 2016 Conference, Lane stated:

"Another thing that bothers me is the low-income designation. I’ve seen larger credit unions seek and get low-income designation and I wonder what their real purpose is behind it. I think in some cases, I don't want to paint everyone with a broad brush here, but I've heard – people talk about these things – we hear they're doing it to get around regulation. In particular, the member business lending cap."

Lane noted that this behavior is chipping "away at a credit union being a credit union" and believes that the credit union industry is at the tipping point with regard to taxation.

Read Lane's comments.