WASHINGTON—Following a speech in which Federal Reserve Board Governor Michelle Bowman addressed how credit unions are indicative of the changing community banking landscape that should factor in how the Fed treats bank mergers, NAFCU has sent a letter that states CUs play a “unique and competitive role in the marketplace,” but are also often more heavily regulated than community banks.
In the letter NAFCU President and CEO Dan Berger stated credit unions are bound to the communities they serve and “continue to fill voids left by bank branch closings.”
Berger added credit unions also “play a vital role in fostering competition in the financial services industry since credit unions typically offer better rates,” and further cited a recent study that estimated that bank customers derived an estimated $8.7 billion in benefits annually over the last decade from this competition.
He further told Bowman credit unions contribute up to $12 billion in GDP annually.
In the letter, Berger said that although credit unions play “a competitive – and positive – role in the marketplace, credit unions are also highly regulated institutions.”
Other Points Raised
Other points made in the letter:
- Berger stated that while Bowman noted the recent rise in credit unions offering commercial lending products during a recent speech, she “failed to mention” the 12.25% business lending cap placed on credit unions.
- Berger stated that only 5.9% of the credit union industry’s assets are business loans, compared to 15.4% of community bank assets.
- Berger added that even though the NCUA has enacted “several long overdue enhancements” to field of membership regulations, “credit unions still face significant hurdles.”
- While banks continue to vacate underserved areas, they “compound the problem” by opposing the Expanding Financial Access for Underserved Communities Act – which would give credit unions the opportunity to help underserved communities.
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