Lack of Accountability

Given the services they provide and their structure, credit unions should presumably adhere to stringent regulatory requirements like banks do and public disclosure requirements like nonprofits do but neither is the case. These substantial regulatory and disclosure gaps shield the credit union industry from proper scrutiny, which is a disservice to all Americans. This is especially problematic for those who support traditional, mission-driven credit unions facing competitive pressures from modern ones pursuing profits. 

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Expert Views

Josh Silver, National Community Reinvestment Coalition
The Community Reinvestment Act should be expanded to cover credit unions, other nonbank lenders and insurers, according to the National Community Reinvestment Coalition. Noting the growing share of nonbanks and credit unions in mortgage lending, NCRC Senior Policy Adviser Josh Silver argued that if nonbanks remain outside of CRA, “the competitive position of banks eventually will be undermined to the detriment of access to safe and sound credit and capital for LMI communities.” 
— National Community Reinvestment Coalition, 2020
Todd Harper, Then-NCUA Board Member and Current NCUA Chairman
“Why should it take complex, federally insured credit unions with $500 million or more in assets seven or eight years longer to implement their comparable risk-based capital rule than it took for banks and thrifts to implement theirs? That’s an uneven regulatory playing field.” 
— National Credit Union Administration, 2019
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Recent News and Insights

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GreenState Credit Union, an Iowa-based industry giant with 270,000 members and nearly $7.5 billion in assets, announced in May 2017 its plan to buy not one but two out-of-state banks in Nebraska and Illinois in an effort to expand its geographic footprint and fuel membership growth.

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On Wednesday, the House of Representatives Committee on Financial Services will hold a hearing focused on “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions.” Among other financial services regulators, the NCUA Chairman will be testifying.

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NCUA’s rush to expand the powers of CUSOs—the organizations that provide financial and operational services for credit unions—has many small credit unions wondering what the hurry is all about. The industry’s little guys risk losing business should CUSOs be allowed even more unregulated, untaxed, and unfettered access to consumers than they already have.

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During the 2021 annual Credit Union National Association’s Governmental Affairs Conference (GAC), NCUA Chairman Todd Harper spoke to (virtual) attendees and warned that the NCUA’s own review of the industry last year found credit unions lacking when it comes to consumer financial protections.

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Credit unions talk a good game when it comes to helping people in times of need. Unfortunately, the economic calamity that has resulted from the pandemic doesn’t seem to meet their stress test for neediness.

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President Biden’s decision this week to name Todd Harper as chairman of the National Credit Union Administration puts in place a highly qualified, deeply experienced regulator at the helm of the industry’s supervisor and federal insurer.

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