WASHINGTON–A group of 40 credit union CEOs has signed a letter to America’s Credit Unions asking it not to support potential legislation that would amend the Federal Credit Union Act in a way designed to benefit Navy Federal Credit Union.
Specifically, the letter states that in the coming days legislation is set to be introduced by Rep. Juan Vargas(D-CA) that would establish requirements for accounts under the Department of Defense’s Overseas MilitaryBanking Program without regard to membership status.
Such a bill would seek to resolve a dilemma for Navy Federal, which won a contract to begin operating the Military Banking Facilities (MBF) overseas, better known as "Community Bank." The MBFs are part of the Department of Defense (DoD) Overseas Military Banking Program and are now co-branded as "Community Bank, Operated by Navy Federal Credit Union.”
Lack of Insurance Coverage
As CUToday.info has reported, the Federal Credit Union Act prohibits providing NCUSIF insurance coverage to those bank deposits. The FDIC, which previously insured the deposits when Community Bank was operated by Bank of America, also no longer provides insurance, and as a result Navy FCU has turned to Dublin, Ohio-based Excess Share Insurance (ESI) for coverage.
In their letter addressed to America’s Credit Unions CEO Jim Nussle, the credit union leaders wrote, “…Differences in opinion about how to tackle one of our toughest challenges to date has brought us to the brink and our movement finds itself standing on the precipice of fracturing.”
Referring to the proposed bill from Vargas, the letter adds, “Many credit unions, especially those operating on or near military installations, oppose this legislation for a wide variety of reasons.
Benefitting ‘One, Rather Than the Whole’
The signatories on the letter state that while there are currently more than 50 bills in the 118th Congress that modify one or more provisions of the Federal Credit Union Act, “nearly all are of common benefit to the majority of credit unions. The Vargas bill stands alone in making modifications to our authorizing legislationbenefiting one rather than the whole, which is counter to our cooperative spirit.”
The letter goes on to state, “Only a few short months ago, we were asked to support the merger of our two trade groups into one organization, America’s Credit Unions, through a lens of advocacy for members that would unite us and allow us to amplify our collective voices, yielding better outcomes for credit unions. Transitions can be daunting and while new beginnings are opportunities, they often also invite new challenges.
“We, the undersigned credit unions, are writing to you today to request that you strengthen your resolve to seek common ground and aim for unity. Credit unions battling credit unions on Capitol Hill should not be acceptable. America’s Credit Unions is in the best position to ensure we leverage the best of our movement – our cooperative spirit,” the letter adds, before concluding, “…Let’s join together, cooperatively, to preserve the Federal Credit Union Act for the common benefit of all.”
America's Credit Unions Responds
In response to a CUToday.info inquiry, Carrie Hunt, America’s Credit Unions' chief advocacy officer, said in a statement, "America’s Credit Unions consistently engages its member credit unions on issues impacting the industry. As it relates to providing services to military members stationed abroad, we have held several conversations with defense credit unions as well as our Advocacy Committee to gain insights into opportunities and concerns with these offerings. We remain committed to direct communication with our members to take their perspective into account in our policy positions and welcome this most recent communication as we continue to formulate a path forward.”
Pushback by Defense Credit Unions
There has been strong push back by military credit unions to the $170.8-billion Navy FCU’s bid in winning the contract to operate the Community Bank, which has branches on many of the same military facilities operated overseas by credit unions. A review of the 41 signatories of the letter shows many are purely defense credit unions or have military members as part of their fields of membership.
CUToday.info has contacted both Navy Federal but has not yet received a response from the organization.
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