Florida Land Bust Complicates CURIA Bid

WASHINGTON – The unfolding scandal in a southwest Florida land bust that has claimed three credit unions already is raising questions about credit unions' bid to expand their business lending powers under the CU Regulatory Improvements Act. The banking lobby was pointing last week to the growing Florida scandal as evidence that many credit unions are not equipped to conduct commercial lending, even as credit unions around the country are expanding their activity. “The unfolding situation, where tax-exempt credit unions around the nation invested in a Florida real estate scheme called “Millionaire University” is a wake-up call on an industry lobbying heavily to further expand their commercial lending powers,” said Camden Find, president of the Independent Community Bankers Association of America, which is lobbying against CURIA. “Many credit unions were involved in this out-of- state commercial loan scheme that was far removed from serving their common bond membership and that eventually may cost the National Credit Union Share Insurance Fund millions of dollars in losses.” A spokesman for the American Bankers Association echoed his criticism. “Policymakers should view the developments in Florida like the flashing yellow lights at a railroad crossing. If you proceed, there is danger ahead. If you stay put, you are safe,” said Keith Leggett, senior economist at the ABA and a chief credit union nemesis, referring to a provision in CURIA which would raise the current cap on member business loans for credit unions. Credit union representatives cautioned against judging the entire credit union movement on the activities of the three failed credit unions, Colorado’s Norlarco CU, New Horizons Community FCU, and Michigan Huron River Area FCU. “In his statement, Camden Fine attempts to tar an entire industry for the unfortunate circumstances of just three credit unions,” said Fred Becker, president of NAFCU. “Based on the news accounts we’ve seen, if established in fact, we cannot condone this loan activity, either, and we look forward to a thorough investigation by the state regulators.”