WASHINGTON–The Independent Community Bankers of America (ICBA) is calling for an investigation by NCUA’s Office of the Inspector General to investigate the agency’s recent move to amend its definition of low-income credit unions “without deference to notice-and comment-rulemaking requirements under the Administrative Procedure Act.”
As CUToday.info reported here, NCUA has approved counting qualified service members who live on military bases at home and abroad when designating a low-income credit union.
To qualify as a low-income credit union, a majority of a credit union’s membership must meet certain low-income thresholds, based on data from the Census Bureau and requirements outlined in the NCUA’s Rules and Regulations.
Under the new approach, military personnel will now be considered in a similar manner as students attending colleges, universities, vocational or technical schools when the NCUA evaluates a federally insured credit union’s low-income designation, the agency said.
‘Spector of Collusion’
In a statement, ICBA President and CEO Rebeca Romero Rainey said NCUA’s actions “raise the specter of collusion that pose serious doubt as to the agency’s motivations and whether it acted in an improper manner that benefits the nation’s largest credit unions at the expense of the smallest.”
The change to allow credit unions to begin counting active-duty military personnel with Army or Fleet Post Office addresses as “low-income” individuals “will free institutions like Navy Federal and Pentagon Federal from restrictions on member business lending, raising supplemental capital, and accepting deposits from non-members.”
In addition, in its letter to NCUA Inspector General James Hagen, Romero Rainey said the move by NCUA “appears to meet the definition of an agency rulemaking that is subject to notice-and- comment procedures under the Administrative Procedure Act (“APA”). However, the agency has yet to adhere to any of the requirements set forth in the APA, and ICBA is concerned that the agency has no plans to do so, which would be a violation of law.
A ‘Host of Concerns’
“NCUA compliance with the APA is not only required by federal law, but it is sound public policy that facilitates public trust in federal institutions,” the letter continues. “Failure to adhere to basic protocol raises a host of concerns regarding the opaqueness of the NCUA’s recent actions. The agency did not address any of the traditional public policy goals behind rulemaking, including the need for the rule, the effective date, the legal authority, or the impact on small entities. Most disturbing, the agency did not even entertain the opportunity for the public to weigh-in and offer comment on the proposed rulemaking, which if found to be legal and permissible, would dramatically benefit the country’s largest credit union at the expense of smaller credit unions and community banks.”
The letter further states there are “wider implications” to how NCUA approved the change that are indicative of a “troubling trend.”
The full letter can be found here.
CUNA Response
In response, CUNA CEO Jim Nussle, noting the trade group has supported the change made by NCUA for several years, issued a statement saying, “NCUA’s decision will allow more credit unions to leverage the LICU designation, expanding access to safe and affordable financial products for American servicemembers. It's incredibly disheartening that bankers would try to prevent our brave men and women in uniform from accessing the services of low-income credit unions.”
In a statement, CUNA went on to say, “This is the latest effort by banking trade organizations to degrade servicemembers’ financial well-being by complicating their access to credit union services. In 2019, ICBA and ABA were behind an effort to open military bases to profit-driven banks and abusive payday lenders, impairing troops’ relationship with their credit union.”