NEWPORT BEACH, Calif.–The National Association of Credit Union Service Organizations (NACUSO) has sent a comment letter to NCUA saying it supports the agency’s new rules related to CUSOs that expand the kinds of lending that can be done.
As CUToday.info reported here, NCUA at its January board meeting put out for comment Proposed Rule, Part 712, Credit Union Service Organizations, which would expand the powers of CUSOs to originate any kind of loan a federal credit union can make and provides the board additional flexibility in setting related policies.
“Here we are in a crisis again, and there is nothing more integral to helping credit unions and their members than additional lending,” wrote NACUSO President Jack Antonini. “…There is no evidence that this extension of lending beyond the currently accepted loan types would hurt the industry, members, or the Share Insurance Fund. In fact, lending CUSOs already benefit all three constituents. We have seen an enormous growth in business loans and mortgage loans over the last ten years, for example, and that growth is somewhat connected to an increase in business and mortgage CUSOs. In that time, there have been few, if any, CUSOs that affected the share insurance fund, and members have benefited by availability of these loan types in the marketplace.”
More Benefits
Antonini additionally told NCUA:
- Expansion of lending powers will create more benefits, including in auto lending, where the lending model is changing drastically and CUSOs’ role in “connecting credit unions with dealers is not enough. Members are no longer exclusively going to the dealership to buy a car. There are a multitude of car buying services and applications springing into the market…How do credit unions continue to be the trusted financing partner with their member on this life event? …Once again, this is an opportunity for CUSOs. If CUSOs are permitted to be the lender in a relationship with these national services, then those CUSOs can keep these auto loans in the credit union industry. The CUSO can be the lender up front and then, just as they do today, get those loans to their credit union partners.”
- The auto lending example is not an isolated one, said Antonini. In all sorts of ways, CUSOs have served as the means for credit unions to innovate and meet their members’ financial needs. There are many examples of credit unions using CUSO relationships to better serve their credit union members. For example, in Washington state where state-chartered credit union owned CUSOs are permitted to originate unsecured loans, credit unions have used CUSOs and adaptive technology to help members break the cycle of predatory payday lenders. These underserved members are so important to the credit union movement and we believe the proposed amendments to the CUSO rule will help federally chartered credit unions do the same.
Focus on Adaptability
“The key reason this proposed rule will be good for credit unions and their members is the focus on adaptability, innovation, and collaboration,” wrote Antonini. “This is not just about auto loans or unsecured loans. It is very important that CUSOs be able to originate loans of any type that credit unions can originate for their members. We do not know where the next lending opportunity will be. There are already companies looking for credit union partners that originate solar loans, renovation loans, boat and airplane loans, etc. Therefore, we commend the board for not focusing Part 712.5 on specific types of loans. CUSOs need the flexibility to assist credit unions with all types of lending markets.”