The largest credit unions with nationwide growth aspirations should be treated like banks, according to an American Banker op-ed published today, with special focus given to community reinvestment requirements and executive compensation.
This is especially important after the National Credit Union Administration’s final rule last week further loosening membership requirements for federal credit unions, which “will advantage a handful of mega-credit unions, further tilt the playing field against community banks and exacerbate existing regulatory challenges that NCUA has yet to focus on,” wrote Aaron Klein, a fellow at the nonpartisan Brookings Institution. He highlighted plans by PenFed Credit Union — which advertises “Great Rates for Everybody” — to grow by nearly 600 percent over a decade in a bid to reach $75 billion in assets.
Klein called on NCUA to require compliance with Community Reinvestment Act tests for the largest credit unions to ensure they remain committed to their missions and communities, not cherry-picking high-dollar customers. He also called for disclosure of credit unions’ executive salaries, as nearly every other nonprofit organization is required to do — a point also raised by Senate Finance Committee Chairman Orrin Hatch (R-Utah) in a much-publicized letter to NCUA earlier this year.