Credit Union Growth Serves the Greater Good
NAFCU's current focus is supporting legislation and regulation that help credit unions grow membership, loans and revenue.
An estimated two million Americans have joined a credit union so far this year. As a community, credit unions have enjoyed record growth the past few years, and admittedly, we’ve grown accustomed to measuring our success in the millions and billions.
But let’s pause for a moment to celebrate this achievement. Because of you, two million people – that is 12,500 people each business day – have gained access to fair and affordable financial services.
Today’s news headlines are dominated by violence, political division and a sense that the world isn’t the beautiful, safe place it used to be. Because of this, people are looking for more meaning in their lives.
Philosophy matters. That makes today a great time to be a credit union, because membership means more than great rates and top-notch service. The not-for-profit, financial cooperative structure restores Americans’ trust in a financial system that too often feels stacked against them. Credit unions take financial services a step further than products and services. Membership builds a path to financial education and financial freedom.
That’s why growth continues to be NAFCU’s top advocacy priority for 2019. This year we have really set our sights on supporting legislation and regulation that help credit unions grow membership, loans and revenue. As credit unions grow assets, they gain greater economy of scale; that’s true for all organizations. But what sets the credit union community apart from the rest is what you do with that scale.
Instead of lining the pockets of wealthy shareholders, you give back, helping even more working-class Americans achieve the American Dream. Credit unions grow to serve the greater good, not the greater greed.
NAFCU led industry efforts to have legislation introduced earlier this year that would allow credit unions to grow and serve even more members. H.R. 1661, introduced by House Financial Services Committee members Lee Zeldin (R-N.Y.) and Vicente Gonzalez (D-Texas) would give the NCUA greater flexibility in setting loan maturity limits.
The bill supports the NCUA’s efforts to extend the 15-year limit on consumer loans and other loans, like one- to four-unit mortgages that are not owner occupied. In August 2018, the NCUA issued a proposal inviting comment on extending maturity limits for these types of loans as part of the agency’s efforts to consolidate and streamline its lending regulations. However, the 15-year limit is statutory; it requires congressional action to amend the Federal Credit Union Act and give the NCUA authority to make the change.
There are two important reasons Congress must act to modernize these outdated loan maturity limits. The first is obvious to anyone familiar with loan underwriting procedures – extending loan maturities improves affordability, allowing more Americans to qualify for credit union loans. It provides more deserving students with fair and affordable financing for college. It allows our brave soldiers, sailors, marines and members of the coast guard to finance their homes through their credit union when they are transferred, instead of having their financing options limited by owner occupied rules.
The second reason this legislative reform is needed might come as a shock to some. Only credit unions are limited to the 15-year loan maturity maximum. Banks and finance companies – including the bad players who caused the mortgage collapse and those who have ripped off student borrowers – are not subjected to these restrictions.
This bill is more than just a technical adjustment. It levels the playing field for credit unions and supports growth for the greater good.
It is the right thing to do.
As NAFCU works hard to assist Congressmen Zeldin and Gonzalez in their efforts to gather support in the House for their bill, we are also advocating for a companion bill to be introduced in the Senate.
This bill is a perfect example of why NAFCU proudly advocates for legislative and regulatory solutions that help our member credit unions grow. We feel good about the work we do, and you should, too. Together, as we grow, we are making a difference in the lives of millions of Americans.
B. Dan Berger is President/CEO for NAFCU. He can be reached at 703-522-4770 or dberger@nafcu.org.