A new article says some credit unions may be abandoning their mission with “Wall Street-style” behavior and no longer serving their core members.
Details: According to the article in The Banker (subscription required), as credit unions continue to scale by aggressively acquiring community banks, some question whether their size is becoming an enforcement gap and raise concerns that credit unions are failing to uphold their mandate to serve people with limited financial resources.
ICBA Statement: ICBA Senior Vice President and Regulatory Counsel Michael Emancipator notes in the article:
The number-one priority for some credit unions now is growth—growth for the credit union as an institution and not necessarily for the good or the best outcome for their members.
Credit unions are getting away with expanding to nearly systemically important bank sizes by exploiting the Credit Union Membership Access Act, which allows federal credit unions to serve multiple groups and communities.
NCUA Take: Tanya Otsuka of the National Credit Union Administration says in the article that there needs to be oversight when a financial institution grows fast.
Growing Scrutiny:
A recent American Banker article says credit unions are indeed announcing more and more bank acquisitions, sometimes thousands of miles away.
ICBA has repeatedly called for policymakers to end the tax exemption for credit unions over $1 billion in assets as these institutions continue to use their tax-exempt status to acquire tax-paying community banks.
A May Bloomberg article captured lawmaker concerns about the credit union tax exemption.
Recent ICBA polling conducted by Morning Consult shows 62% of U.S. adults say credit unions that operate like banks should have to pay taxes like banks.