NCUA Rejects GAO Recommendations on Credit Unions
ICBA expressed its disappointment this week at the response of the National Credit Union Administration to the recent General Accounting Office report on credit unions. The GAO study, released last October, confirmed that credit unions are not only getting larger, they are not living up to their statutory mission of serving people of small means.
In a letter to the chairman of the House Government Reform Committee, NCUA chair Dennis Dollar rejected the GAO's recommendation that NCUA gather more Community Reinvestment Act-type information from its members to determine whether credit unions are providing greater access to services in underserved areas. Dollar said that the recommendation would require the NCUA to impose "substantial expanded record-keeping and reporting burdens on federally insured credit unions" and that such burdens were not "cost-justified."
The GAO report indicated that based on HMDA loan application records and data from the Federal Reserve Board's Survey of Consumer Finances, credit unions made a lower proportion of mortgage loans to households with low and moderate incomes than did peer group community banks, and that overall they served a lower percentage of households of modest means.
"Once again, the NCUA and the credit union industry seem to be ignoring the mounting evidence that credit unions are losing sight of their statutory mission which is to provide financial services to people of small means," said ICBA president-elect Cam Fine. "If tax-exempt credit unions want to be the functional equivalent of banks and compete on expanded product and service lines, they should comply with the same laws and regulations as tax-paying banks, including CRA. NCUA needs to develop indicators to evaluate credit union progress in reaching the underserved as the GAO report recommended."