WASHINGTON–In a comment letter, the American Bankers Association urged NCUA to withdraw its proposed rule for CUSOs.
As Cutoday.info reported here https://www.cutoday.info/Fresh-Today/NCUA-Proposes-To-Expand-CUSO-Lending-Authorities, proposed Rule, Part 712, Credit Union Service Organizations, would expand the powers of CUSOs to originate any kind of loan a federal credit union can make and provides the board additional flexibility in setting related policies.
Currently, CUSOs can only engage in four types of loans: Business, consumer mortgage, student loans and credit cards. The NCUA board has since 2008 been considering whether to expand the categories of permissible lending, according to agency staff.
“As CUSOs may serve people who are not members of a credit union, the expanded authority would further undermine credit union field-of membership restrictions, which is one of the central justifications for their tax-exempt status,” the ABA said.
The ABA also said it has concerns the proposal would “give rise to numerous safety and soundness and consumer protection risks, given that the NCUA has no examination or oversight authority over CUSOs and no mechanism exists to hold them accountable for unsafe and unsound practices or violations of federal consumer financial protection laws.”
Moreover, said the banking industry trade group, the proposal would “jeopardize the National Credit Union Share Insurance Fund, and potentially imperil retail borrowers, particularly those in underserved areas and low-to-moderate income communities.”
Other Demands
The ABA is calling on NCUA to refrain from any CUSO-related rulemaking until:
- It is given statutory authority to supervise and examine CUSOs
- It performs an economic analysis to ensure safety and soundness risks can be addressed
- It withdraws—and refrains from taking any further action on—the proposal’s granting of authority to approve CUSO activities and services outside of the formal rulemaking process and broadening credit unions’ investment authority.
The ABA noted bankers nationwide have submitted more than 600 of their own comment letters as part of an ABA grassroots campaign.