WASHINGTON–The American Bankers Association is calling NCUA’s latest proposal “deeply troubling.”
The bankers’ statement is in response to a vote by the NCUA board to put out for 60-day comment a proposal that would raise the current nonmember deposit limit to 50% from 20%.
Under the rule, FCUs would be able to accept nonmember and public unit shares up to 50% of paid-in and unimpaired capital and surplus, as CUToday.info reported here.
“It would allow credit unions to take even more deposits from outside their traditional membership base, further accelerating their growth at a time when NCUA is already struggling to oversee the industry and putting taxpayers at risk,” said Ken Clayton, EVP-Legislative Affairs and chief counsel with the ABA, in response to the proposal. “This proposal also undermines one of the founding principles behind credit unions, the cooperative notion that the resources for credit union lending come from their members and that they serve people of modest means who share a common bond.”
The American Bankers Association also criticized the proposal as “deeply troubling.”
What FCU Act Permits
As CUToday.info reported, under the Federal Credit Union Act, a federal credit union may have up to 20% of total shares, or $3 million, whichever is greater, from nonmembers under certain circumstances. A federal credit union can also request a waiver from this limit from an NCUA regional director, and that waiver request must include a specific, written plan for how the additional shares would be used. The proposed rule would eliminate the waiver request process. However, a federal credit union would be required to develop a specific use plan if its nonmember shares, combined with its borrowings, exceeds 70% of paid-in and unimpaired capital and surplus, the agency said.
NCUA board members and staff Thursday stressed the rule is aimed primarily at helping small credit unions grow.
“I share the staff’s belief that this rule will especially help low-income-designated credit unions and just small CUs in general,” said Chairman Rodney Hood during the NCUA board meeting. “These are the folks who are epitomizing the people helping people ethos. They are the ones really lending to low income communities, and I especially look forward to hearing their comments.”
Comments on the proposal are due 60 days after publication in the Federal Register.