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ICBA Urges NCUA to Withdraw Proposal to Ease Standards for Community Credit Union Charters

Washington, D.C. (August 7, 2007)—The Independent Community Bankers of America (ICBA) urged the National Credit Union Administration (NCUA) to withdraw its proposed amendments to the regulator's chartering manual that would make it easier for federal credit unions to acquire or convert to community charters and expand their service areas.

"Each community charter application or conversion proposal should be handled on a case-by-case basis rather than on presumptions of what are 'local communities,"said Christopher Cole, ICBA regulatory counsel, in a letter to NCUA. "ICBA strongly objects to NCUA's attempts to expand the statutory definition of a 'well-defined local community' by defining 'presumptive local communities.'"

ICBA also said it is inappropriate to presume the existence of a local community based on federally structured statistical areas. "The NCUA approach undermines the concept of the common bond supporting the parameters established by Congress," the letter continued. "In fact, taken to its logical conclusion, the NCUA approach belies the distinction between a community credit union and a community bank. Without some meaningful distinction, there is no need for a separate charter and the credit union should become a commercial bank."

ICBA has long opposed expanded powers for credit unions, including proposals to raise the cap on member business loans, so long as credit unions remain exempt from taxation. Instead, ICBA is a strong advocate for tax parity between community banks and credit unions, arguing that a fair and unbiased tax system should apply the same tax treatment to similar industries, economic actions and transactions.