Just after NCUA Chairman Debbie Matz drew ire from credit unions for testifying in a congressional hearing that overregulation has not led to the weakening of credit unions, and stating that they don't represent their members, the 53 State Bankers Associations sent a letter to Congress calling the NCUA a "cheerleader" for credit unions.
The letter, posted to the American Bankers Association's website, called on members of Congress to investigate the NCUA.
"We are deeply troubled by the actions and recent comments from NCUA's Chairman that, in the name of 'regulatory relief,' the agency is prepared to essentially provide the credit union lobby's legislative agenda through regulation despite Congress' repeated unwillingness to do so directly," the letter read. "For example, in June, NCUA proposed expansive changes to its business lending regulations, claiming authority to raise the congressionally-imposed cap on business loans. The proposal also effectively makes the cap irrelevant through changes to loan participations, threatening safety and soundness and diverting credit unions from their mission of serving consumers.
The letter continued, "'Regulatory relief' does not mean promoting explosive growth of the credit union industry at the expense of taxpayers, community banks or the communities those banks serve. Credit unions enjoy a massive $25.39 billion federal subsidy over 10 years in the form of the tax exemption."
In an op-ed that will be published in The Hill, NAFCU President/CEO Dan Berger said Frank Keating of the ABA would "do well to clean up his own backyard before casting aspersions on credit unions."
He said credit unions fill a critical void.
"A 2011 study commissioned by SBA's Office of Advocacy found that bank business lending was largely unaffected by changes in credit unions' business lending, and credit unions' business lending can actually help offset declines in bank business lending during a recession," Berger said. "Banks are welcome to convert to credit unions anytime they wish if they truly want the advantages of being a credit union."
The NCUA has come under fire recently after several credit union executives and trade associations said overregulation is causing them to lose nearly a quarter of the industry to mergers. At a congressional hearing Thursday, Matz argued that was not the case and upset credit union executives by saying they do not represent their members. Matz clarified that statement Friday, stating she "emphasized the importance of the NCUA being an independent financial regulator, which protects the deposits of credit union members."
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