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.
Four Minnesota credit unions are banding together to create a credit union service organization (CUSO) that would allow the multibillion-dollar financial institutions to make commercial business loans up to $50 million – ten times more than what they’re currently able to do on their own.
The relentless push by credit unions to evade meaningful regulation under the Federal Credit Union Act has reached new heights of absurdity with the latest proposed rule before the National Credit Union Administration.
Credit Union Service Organizations (CUSOs) – the companies that exist to provide operational services for credit unions – last week eked out a victory from the NCUA Board that could have long-lasting, negative, systemic impact for the safety and soundness of the industry.
The $5.2-billion Lake Michigan Credit Union agreed to acquire $400-million Encore Bank, headquartered in Naples, Florida. The combined entity will have over $9 billion in serviced mortgages, with ten branches in Florida and over 40 in Michigan.
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.
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.
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.
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.
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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