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.
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