A story on NPR’s “Marketplace” program tonight illustrated how credit unions have used ever-looser field of membership regulations to expand beyond their intended communities. The story also spotlights the American Bankers Association’s leadership in fighting back against these looser rules in court, with oral arguments in the case scheduled for April 16 before the D.C. Circuit Court of Appeals.
The centerpiece of the story is what reporter Nancy Marshall-Genzer calls a “daisy chain” of members — a group of several young people in the D.C. suburbs with no military connection who became members of Navy Federal, the nation’s largest credit union with nearly $100 billion in assets and one with a stated mission of serving “the military community.” In this case, a four-person chain of successive roommates used Navy Federal’s household member loophole to become members.
The reporter interviewed ABA Chairman-Elect Laurie Stewart, who leads Seattle-based Sound Community Bank, which used to be a credit union but converted to a bank rather than push at the limits of its tax exemption. Stewart told “Marketplace” that credit union loan rates are as much as 100 basis points lower than what she can offer. “I’ve had customers call me, and I’ve had to say to that client, ‘If you can get that rate and term, take it,’” she said.
