NAFCU Disputes Assertions That CUs HaveUnfair Edge
ARLINGTON, Va. - (06/29/05) NAFCU has sent a letter toSenate Banking Committee Chairman Richard Shelby refuting FDIC ViceChairman John Reichs recent testimony suggesting that creditunions have an unfair competitive advantage over banks.Reichs testimony, submitted to the Senate BankingCommittees hearing on regulatory relief, argues thatNCUAs approval of ever-expanding fields ofmembership, combined with the ability to offer a full rangeof products and services without having to pay federal taxes andwithout laboring under the Community Reinvestment Act gives creditunions advantages that make for an uneven playing field, acondition that Congress should re-examine and seek toresolve. But NAFCUs letter suggests this simplyisnt true, noting that: credit unions continue to hold just1.4% of domestic financial assets, as they have for the last 25years; a Treasury Department study concluded that creditunions are not a threat to the viability and profitability of otherinsured institutions; and the commercial banking industry continuesto rake in record-breaking profits, among other points. Moreover,NAFCU asserted, CRA was imposed on banks as thrifts because theyhad been engaged in red-lining, while CUs were exempt from CRAbecause Congress determined the CU movement was not engaging inthis practice. In conclusion, NAFCU writes,credit unions do not have a competitive advantage overbanks. In fact, credit unions are more highly regulated than anyother type of financial institution.