ALEXANDRIA, Va. - Credit unions are calling on NCUA to adopt its proposed CUSO rule in order to broaden the kind of activities the credit union subsidiaries may engage in.
In a comment letter on the proposal Navy FCU urged NCUA to add credit card origination and payroll processing, as well as all types of lending, to the preapproved list of CUSO activities. “Credit unions,” said John Peden, acting president of the $36 billion credit union, “should have the option of using CUSO’s to aggregate volume and manage risk across all of their loan products.”
NAFCU also asked NCUA to expand its list of permissible CUSO activities to include all types of lending that federal credit unions are currently authorized to engage in.
PSCU Financial Services, the largest CUSO in the nation, asked NCUA to allow CUSOs to accept deposits, at least from commercial entities, in order to help them fund activities, such as the proposed credit card (consumer) lending.
PSCU also asked that CUSOs be allowed to participate out loans, as natural person credit unions are allowed to do. “By allowing the sale of loan participations to credit unions, the CUSO would benefit from funding and loan loss provision prospective,” said Steve Salzer, general counsel for the transactions processing CUSO.
Kinecta FCU, which acquired a large check processing company last year, asked NCUA to amend the CUSO rule to allow the sale, processing or servicing of all money transfer instruments, and that the “primarily serves test,” requiring that a majority of CUSO customers be credit union members, be changed for these services so that the CUSO would only be limited by the members and eligible members within its field of membership.
The Washington CU League objects to a part of the CUSO proposal which would give NCUA authority to audit the books of CUSO owned by all federally insured credit unions.
The league said it does not believe NCUA has the legal authority to examine CUSOs; should not spend its time and resources examining CUSOs; and does not have the expertise to examine non-credit union activities performed by CUSOs. Most CUSOs are chartered as state-registered corporations or partnerships.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
