Nussle to Congress: Community Bankers’ Credit Union Claims Are ‘Meritless’
President of America’s Credit Unions defends credit unions and NCUA
The credit union-bank feud has flared anew, as America’s Credit Unions President/CEO Jim Nussle fired back Wednesday at community bankers’ accusations that credit unions are poorly regulated financial institutions that take advantage of their tax exemption to purchase banks.
“To set the record straight: the bankers’ underlying claims have been proven over and over to be meritless, and we reiterate that here again,” Nussle wrote in a letter to members of the House Financial Services and Senate Banking committees.
Additionally, Nussle took a shot at banks, writing, “Regulated credit unions did not cause the Great Recession and bring the country to the brink of financial ruin, and credit unions have not led the headlines for defrauding their own members to increase stockholders’ profit.”
The catalyst for the latest volley of charges and countercharges appears to be a CNN report that said Navy Federal Credit Union was far more likely to deny Black mortgage applicants than White applicants.
“The largest credit union in the US has the widest disparity in mortgage approval rates between White and Black borrowers of any major lender, a trend that reached new heights last year,” CNN reported in December. Navy Federal has said the CNN story did not accurately report the credit union’s practices. Nonetheless, the CNN story has renewed the perennial battle between credit unions and banks.
In a letter to members of the House Financial Services and Senate Banking committees, Independant Community Bankers of America President/CEO Rebecca Romero Rainey wrote, “We firmly believe it is time for Congress to revisit the outdated credit union [tax] exemption. Potential fair lending violations at Navy Federal only strengthen this case.”
She added that many observers believe that the National Credit Union Administration’s consumer compliance supervision has failed to keep pace with an evolving industry. While they have not said their agency has been lax, NCUA Chairman Todd Harper and new board member Tanya Otsuka have said they want to focus more on the agency’s consumer protection efforts.
Romero Rainey renewed her criticism of credit unions purchasing community banks, contending that the credit union tax exemption gives credit unions an unfair advantage.
In his letter, Nussle presented the credit union case, arguing that:
The number of community banks selling to credit unions is miniscule compared to banks purchasing other banks. Nussle wrote that since 2012, there have been 2,453 banks sold to other banks, while 67 banks sold their assets to credit unions. “The bottom line is no one forces a bank to sell to a credit union,” he wrote. “It is a free-market business decision made by those privately-owned banks to sell their branches and businesses to credit unions.”
The NCUA has been a diligent regulator. “The NCUA is a strong, independent regulator that has proven capable of effectively managing and preserving a safe and sound credit union industry through difficult financial times,” Nussle wrote.
A recent analysis performed by America’s Credit Unions showed that credit union mortgage lenders equaled or outperformed bank mortgage lenders across 115 of 159 key mortgage performance metrics.