The ABA, ICBA, and NCRC’s joint letter to the House Financial Services Committee and Senate Banking Committee calls on Congress to exercise oversight, schedule a hearing, and enact legislation concerning credit unions.
The American Bankers Association, Independent Community Bankers of America, and National Community Reinvestment Coalition have transmitted a joint letter to the leaders of the House Financial Services Committee and Senate Banking Committee to underscore the “troubling rulemaking activity at the National Credit Union Administration (NCUA) that warrants immediate oversight from Congress.” The banking and community trade groups observe that the NCUA is in the process of finalizing rules that would “undermine important statutory guardrails designed to protect low-income consumers,” despite “bipartisan objections from NCUA’s current Democratic Chairman Todd Harper and former Republican Chairman Mark McWatters.” Along these lines, the November 2021 letter from the ABA, ICBA, and NCRC urges Congress to “exercise its oversight function over the NCUA,” schedule a hearing to examine the likely impact of proposals “on the provision of tax-subsidized financial services to at-risk communities,” and enact legislation “subjecting credit unions to the Community Reinvestment Act to ensure credit unions serve all communities.”
Concerns. Among other things, the letter from the banking and community trade groups communicates that, less than a month ago, the NCUA completed a proposal that “would expand payday and other forms of lending by Credit Union Service Organizations (CUSOs).” Because the NCUA lacks supervisory authority over these third-party CUSOs, even NCUA Chairman Harper has predicted that providing the CUSOs with full lending powers “will create an unregulated Wild West within the credit union space with little accountability for protecting consumers and credit unions,” the letter explains.
Moreover, the NCUA’s current proposal would make it possible to “add groups to a credit union’s field of membership on what is effectively a national basis–without regard to the statutory requirement of the credit union being in ‘reasonable proximity’ to the people they are looking to serve.” The trade groups express their concern that the NCUA proposal “could allow credit unions to more efficiently ‘cherry pick’ their customers.” Further, the ABA, ICBA, and NCRC share Chairman Harper’s concern about the NCUA’s legal authority to finalize proposed rules under “highly unusual” procedures and processes.
Call to action. In light of these developments, the banking and community trade groups exhort Congress to “call a hearing at once with all three NCUA Board Members to discuss these actions and ask proponents for these changes to defend them.” At the very least, a hearing is “a necessary event for a $2 trillion industry safeguarding the financial lives of tens of millions of households,” the groups assert. Further, Congress should “take the logical next step” and cover the credit union industry under the Community Reinvestment Act, the letter concludes.
Companies: American Bankers Association; Independent Community Bankers of America; National Community Reinvestment Coalition
LegislativeActivity: CommunityDevelopment ConsumerCredit Loans OversightInvestigations PrudentialRegulation