Federal Deposit Insurance Corporation building in Washington, D.C. Photo: Diego M. Radzinschi/ALM
Typically the nation’s credit union trade groups address threats from regulators that might cut into credit union revenue incrementally — like an expanded budget for the NCUA and tighter consumer protections around overdraft fees.
Those concerns remain, but officials with the Defense Credit Union Council (DCUC) and America’s Credit Unions on Monday brought up the possibility that Trump’s advisors might recommend something completely different: Combining the NCUA and the FDIC.
The issue, raised in a Wall Street Journal article on Thursday, reflects that the nation is entering a period where nothing typical can be assumed, and changes might no longer come in small packages.
Anthony Hernandez, president/CEO of DCUC, called any expectations that such a consolidation would streamline bureaucracy a “fantasy” in an opinion column published Monday by CUInsight.
Instead, Hernandez said such a combination would wind up costing credit union members more and erode “a sustained decades-long ecosystem that has served the financial needs of underserved, rural or vulnerable communities across America.”
“As member-owned, not-for-profit institutions, credit unions exist to serve their members, not shareholders,” Hernandez said. “The NCUA’s independence is crucial in recognizing and upholding this distinction, governing credit unions through a unique cooperative model that demands a tailored oversight.”
During America’s Credit Union’s Monday call with reporters, Chief Advocacy Officer Carrie Hunt said she had been fielding many questions from credit unions about the Journal’s report.
Hunt said the issue of combining the FDIC and NCUA needs to be taken back to members, but she said the predecessor organizations had long supported the NCUA as an independent regulator.
While having a single financial regulator is a practice that has worked for countries in Europe and elsewhere, she said the NCUA’s independence also reflects the way its insurance fund is set up differently than the FDIC.
“Credit unions have a mutual insurance fund, in that they have to maintain a 1% deposit,” Hunt said. “That has insulated our insurance fund from having government bailouts over the years.”
Hunt offered a few reasons credit unions might be shielded from such a change:
- Republican control of Congress is thin.
- President-elect Trump's priorities. This is probably low on his list and the view might not be worth the climb.
- Organizational capacity. It would take years if done responsibly.
- The assumption that Trump would not want to disrupt the nation’s financial system.
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