On the eve of the largest credit union industry lobbying event of the year, a Newsmax op-ed columnist on Friday argued against a rule change being considered at the National Credit Union Administration that would allow institutional investments in credit unions.
“At their core, credit unions are not-for-profit cooperatives, set up so their customers are ultimately the decision-makers for the institutions,” wrote Drew Johnson, senior fellow at the National Center for Public Policy Research. “Investor capital could change all of that.” He added that institutional investors—including pension funds, mutual funds, insurers and hedge funds—are most likely to be attracted to large and fast-growing credit unions, which would further widen the gap between the largest bank-like CUs and small, focused institutions.
Specifically, Johnson argued, credit union management is likely to be more attuned to large institutional investors than to a single member-owner, and facilitate large credit unions growing out of sync with their statutory mission. “Unless the NCUA does something to change the current trend, credit unions will be little more than a group of billion-dollar actors in search of profits while exploiting their not-for-profit structures,” he wrote.