Dollar Says CAP's Repeal In No Way Led To Current Situation
While some may be wishing that NCUA's repealed-before-it-could-even-be-implemented Community Action Plan had stayed on the books, former NCUA Chairman Dennis Dollar has no regrets about engineering the demise of his predecessor Norman E. D'Amours' legacy, not even with the recent Congressional interest in serving the underserved.
"I've had some at the NCUA complain to me 'we wouldn't be in this situation if you'd have just let us keep CAP,"' Dollar told The Credit Union Journal. "But my response to that is, 'no, if we had kept CAP, what you'd have now is full-blown CRA, and it still wouldn't be enough for the bankers. You are never going to do enough to satisfy the bankers.'"
But perhaps Dollar can at least sympathize with D'Amours on one thing: he, too, is witnessing a partial dismantling of one of his own legacies: Access Across America.
"You know, NCUA already had it on the books, credit unions were already allowed to add low-income communities, all I did was give it a name and really market it to credit unions," Dollar related.
But now NCUA has put a moratorium on adding low-income communities and may well determine not to allow community charters to add low-income communities, allowing only SEG-based credit unions to participate in AAA. This move came on the heels of a banker lawsuit over several credit unions in Utah that converted from state charter to federal charter and then used the AAA program as a means of adding areas to their fields of membership that had been taken away from them under the state statutes at the banks' behest.
Very Narrow Statute
The decision not to allow community charters to participate in AAA would come from "a very narrow reading of the statute," Dollar suggested, noting that none of the legal staff at NCUA had any problem with the wider reading of the statute he used to promote the program to credit unions.
"But such restrictive regulations often have unintended consequences, no matter how well intended they are," he offered. One potential unintended consequence of this change: multiple group credit unions that take in low-income areas could find themselves unable to convert to community charters in the future.
This could have dire consequences for some CUs, Dollar explained, relating how one CU he is working with in his consulting capacity, built several branches in very expensive areas when one of its SEGs moved into those areas. Building those branches was expensive, and the only way to make them profitable was to add surrounding low-income communities to supplement the SEG facilities in those areas.
This strategy worked fine, until the SEG decided to leave those areas. Now the credit union would like to convert to a community charter in order to make the most of the investment it has made in those branches, but with the advent of the moratorium, the CU's only choice may be to convert to a mutual bank charter. "They do not want to convert," Dollar emphasized. "But their options are extremely limited."