Proposed regulations from the National Credit Union Administration would render the concept of a common bond between credit union members meaningless, ABA said in a comment letter filed today. NCUA has proposed to expand the already loose fields of membership from which federal credit unions can draw their customers.
NCUA’s proposal far “oversteps its regulatory authority, sidestepping Federal Credit Union Act requirements in the name of industry growth and replacing its own judgment for that of Congress,” ABA said. The association urged NCUA “to reconsider this egregious overreach and shelve this proposal in favor of working with Congress to secure any desired modifications to credit union field of membership requirements.”
ABA argued that the proposal goes well beyond reasonable definitions of “local” when defining common bond, that its “rural district” definition would likewise render common bonds meaningless and that its expansion of the multiple common bond charter violates the statute. ABA added that NCUA did not — but should — address the major adverse competitive effects of the proposal.
In related news, the state bankers associations wrote to the congressional taxation committees today and urged them to “investigate the tax implications of the latest increase in powers” NCUA has proposed for credit unions. “The proposed changes should call into question whether the 82 year-old tax exemption is appropriate in the modern era,” the groups said, calling for Congress to level the playing field between taxpaying banks and tax-exempt credit unions that are otherwise virtually identical.
Monday is the final day for bankers to send comments to NCUA opposing its proposal.