WASHINGTON–A bank trade group wants NCUA to “withdraw and redraft” its proposed field of membership rule.
In a comment letter to the agency, the Independent Community Bankers of America (ICBA) is calling on the agency ditch the proposal it says would “allow tax-exempt credit unions to cut urban communities out of the membership areas they serve.”
As CUToday.info reported earlier, NCUA has resubmitted its field of membership proposal following a circuit court ruling in a lawsuit filed by the American Bankers Association after the initial proposal. The court generally ruled in favor of NCUA, but did ask the agency to rework language in certain areas where the bankers had argued “redlining” could occur.
"The NCUA's flawed proposal allowing credit unions to discriminate against urban areas is the latest example of this captive regulator bowing to the growth-obsessed financial firms it is charged with regulating at the expense of local communities," ICBA President and CEO Rebeca Romero Rainey said in a statement. "It is long past time for Washington and Americans nationwide to 'Wake Up' to the risky practices, costly tax subsidies, and irresponsibly lax oversight of these tax-exempt institutions."
ICBA said its comment letter makes clear NCUA has not addressed redlining concerns. “The NCUA claims legal protections will prevent illegal discrimination, but its 25 yearly on-site compliance and lending exams are insufficient for an industry that serves 117 million members,” ICBA said.
With the ABA now asking the court to throw out its earlier ruling and rule again, ICBA said it wants NCUA to rescind its proposed rule until the legal challenges against it have been addressed by the courts.
Should it resubmit its proposal, ICBA said NCUA should require individual credit unions to demonstrate a “compelling need to exclude urban cores from their service areas, allow community groups to protest exclusion from credit union service areas, and permit credit union members to vote on these kinds of decisions.”