A new NCUA policy on counting servicemembers in determining whether a credit union is” low-income” is an illegal expansion of the limits Congress has placed on the institutions, the Independent Community Bankers of America charged Thursday.
“The NCUA’s changes–made without a formal rule subject to public review and comment–is another example of this captive regulator expanding the powers of credit unions well beyond the limits established by Congress to justify their tax exemption,” ICBA President/CEO Rebeca Romero Rainey said.
The NCUA announced Thursday that military personnel who do not have a street address may now be counted in determining whether a credit union is designated a low-income institution. That designation provides a credit union with an exemption from the Member Business Lending cap and allows credit unions to accept deposits from non-members. In addition, the designation allows credit unions to obtain supplemental capital.
The change was made outside the normal regulatory process, which allows public comment on proposed rules, Romero Rainey said, adding that it gives the largest credit unions free rein to allow investors to exploit their tax-exempt status. The change also allows the credit unions to engage in “unbridled” commercial lending, she said.
“In other words, these large financial firms may operate like full-service banks on a national scale while continuing to pay no federal income tax,” Romero Rainey said.
And in a not-so-veiled reference to CUNA’s “Open Your Eyes to a Credit Union” campaign, she added, “It is long past time for Washington to wake up and open its eyes to these financial firms’ risky practices and irresponsibly lax oversight.”