The NCUA should not be permitted to end-run Congress with a proposal to significantly expand member business lending and other forms of credit union commercial lending and discard or weaken critical prudential safeguards.
Washington, D.C. (PRWEB) August 31, 2015
The Independent Community Bankers of America® (ICBA) expressed strong opposition to the National Credit Union Administration board’s proposed rule to relax business-lending rules for tax-exempt credit unions. In a comment letter, ICBA wrote that the proposed rule to expand lending authority while relaxing regulatory oversight would jeopardize the safety and soundness of federally insured credit unions and place undue risk on U.S. taxpayers.
“Member business lending is a highly contentious issue which has been debated in Congress for more than a decade,” ICBA wrote. “The NCUA should not be permitted to end-run Congress with a proposal to significantly expand member business lending and other forms of credit union commercial lending and discard or weaken critical prudential safeguards.”
The NCUA’s proposal to expand loopholes to taxpayer-subsidized credit unions’ 12.25 percent cap on business-lending authority would replace strict commercial lending standards with abstract principles, ICBA wrote. This would defy congressional intent, weaken loan standards and allow large credit unions to flout the cap. ICBA called on the NCUA to demonstrate a need for these relaxed standards and to retain its personal guarantee requirement for borrowers as well as collateral and security requirements for member business loans.
ICBA and the nation’s community bankers are deeply concerned with the tax-exempt credit union industry’s mission creep, as represented by the NCUA’s proposal. ICBA and the nation’s more than 6,000 community banks believe that the credit union industry should not expand its business-lending authority as long as it remains exempt from taxation and federal financial regulations such as those under the Community Reinvestment Act.