CUs To NCUA: Don't Back Down To BankersOn Underserved
ALEXANDRIA, Va. - (03/28/06) -- Credit unions executives areoverwhelmingly asking NCUA not to bar underserved expansions forcommunity charters, despite the legal challenge launched by thebankers. The vast majority of comment letters submitted to NCUA ona proposed rule to restrict underserved expansions to multiplegroup credit unions say NCUA ought to ask Congress to amend the lawif a federal court rules against NCUA's practice of grantingunderserved expansions for community and single common bond creditunions. Commenters said a permanent ban on such expansions couldcost community charters already approved for underserved servicesmillions of dollars to withdraw those operations and deny millionsof Americans access to lower-cost credit union services. Byprohibiting non-multiple common bond credit unions from servingunderserved areas, the proposed rule falls squarely in line withthose who seek to eliminate the credit union alternative in themarketplace, as competition would be eroded, wrote David Reynolds,president of Security Service FCU. Patricia Kimmel, president ofFort Belvoir FCU, urged NCUA to seek a legislative remedy, if oneis needed, to allow community charters to expand into underservedareas. There should be no limits when we talk of service to theunderserved, she wrote. I believe the service to both underservedand low income areas is the mission of credit unions and shouldnever be limited to the type of charter you are serving under nowor at the time of a charter change, said Tom Brewer, president ofPeoples FCU. NCUA is expected to adopt a new rule permanentlybarring community charters from adding underserved expansions, inorder to settle its pending lawsuit with the American BankersAssociation.