Following Navy Federal Credit Union’s announcement that its overseas military banking program will be called “Community Bank,” ICBA urged regulators to issue cease-and-desist orders directing the institution not to refer to itself as a bank.
Background: The $168 billion-asset institution said it is calling its program to operate overseas military installations “Community Bank, Operated by Navy Federal Credit Union.”
ICBA Statement: ICBA President and CEO Rebeca Romero Rainey said:
The FDIC and National Credit Union Administration should immediately issue cease-and-desist orders given NCUA legal guidance has determined that federal law does not explicitly permit insured credit unions to refer to themselves as banks or banking organizations.
Federal agencies should ward off any attempts to conflate a bank with a credit union, which would likely result in confusion among servicemembers.
It is not clear whether this new breed of institution will be examined by the NCUA, be subject to federal fair lending laws, or provide federal insurance.
Divergent Standards: “Imitation is the sincerest form of flattery, but Navy Federal — which has been subject to multiple congressional inquiries following CNN’s reporting of racial disparities in the lender’s mortgage approval rates — appears to be trying to mask the fact that it is a global financial institution that does not pay taxes or meet the same level of regulatory standards as real community banks,” Romero Rainey said.
Grassroots Resources: Community bankers can use ICBA’s Be Heard grassroots action center to call on their members of Congress to hold a hearing on the NCUA’s lax oversight. Additional resources on credit union policy are available on the ICBA website.
