WASHINGTON–One banking industry trade group is raising objections to NCUA’s proposed new rules around subordinated debt.
As CUToday.info reported here, the NCUA board has put out for 120-day comment a proposal to amend its rules on subordinated debt that would double the number of complex credit unions eligible to issue such debt.
"ICBA and the nation's community banks strongly oppose today’s National Credit Union Administration proposed rule to allow the largest and most complex tax-exempt credit unions to issue subordinated debt as an alternative form of capital, and we urge the agency to withdraw its plan,” said Independent Community Bankers of America President and CEO Rebeca Romero Rainey. “This proposal is yet another example of the NCUA pushing the envelope and expanding credit union powers well beyond limits justifying the industry’s tax exemption.
“The NCUA’s proposal would undermine credit unions’ mutual ownership structure, allow outside investors to exploit the credit union tax subsidy, and fuel runaway growth of an industry that has abandoned its founding mission to serve people of modest means,: Romero Rainey continued. “Today’s plan would put the financial system and taxpayers at increased risk, just like a similar proposal introduced nearly three years ago that has languished amid strong opposition and the agency’s ongoing legal challenges.”
Separately, regarding a separate proposal put out for comment by the board related to CU acquisitions of bank assets, the ICBA said it wants NCUA to expand on that proposal to provide more transparency and disclosures when a credit union acquires bank assets.
“The growing trend of large credit unions using their taxpayer-funded subsidies to acquire smaller, tax-paying community banks worsens banking industry consolidation, reduces tax revenues for local communities, and furthers the credit union industry's encroachment into full-service banking,” said Romero Rainey.