Opinion: NCUA’s Low-income Designation Hurts Servicemembers

An op-ed by Rob Nichols, American Bankers Association president and CEO, and Steven J. Lepper, president and CEO of the Association of Military Banks of America, appeared in American Banker on June 18, 2020.

Read an excerpt below and the full op-ed here. 

Here are just three examples of the gifts the NCUA can now grant to the nation’s largest credit unions that have nothing to do with helping the troops, and everything to do with expanding other business at these large credit unions at the expense of smaller institutions.

First, low-income credit unions are allowed to seek secondary capital investments from beyond their customer base. That means Navy Federal, which already has assets of $126 billion, can now turn to hedge funds to fuel its growth.

By law, credit union customers must share a “common bond.” Yet the only common bond with those outside investors is a thirst for tax-advantaged credit union profits.

Second, the NCUA move will grant mega credit unions expanded limits on nonmember deposits, allowing them to tap institutional investors and other outside players seeking to benefit from their tax-exempt status.

Lastly, traditional credit unions face a statutory cap limiting their ability to make business loans, a restriction designed to maintain safety and soundness, and focus on their mission of making consumer loans. With the new low-income designation from the NCUA, that cap disappears for these credit union behemoths. Meaning, young Marine recruits will not share in PenFed’s next multimillion-dollar real estate development deal.

Read the full story here. 

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