ALEXANDRIA, Va. – The NCUA Board approved new powers yesterday for credit union-owned subsidiaries, known as CUSOs, but stopped short of letting credit unions set up their own auto financing acceptance corp., like GMAC, through a CUSO.
The acceptance corp. proposal was put forward earlier this year by several California credit union owners of CU Direct Lending--a CUDLAC--who argued that CUSO should be allowed to purchase retail instalment sales contracts from dealers in order to facilitate large-scale purchases and carve out a bigger share of the market for credit unions. Under current NCUA rules CUDL must first have its credit union members finance auto purchases.
CUDL, the largest indirect lending CUSO, said the current restrictions from financing auto sales puts it at a significant disadvantage to such competitors as DealerTrack and Route One, which are able to finance large volumes of auto transactions at a time.
The new rule will allow CUSOs to originate credit card loans and to offer payment processing services. It also added specific new powers to offer stored value cards, gift cards, postage stamps and transportation tokens.
The new rule will also give NCUA explicit access to the books and records of CUSOs owned by federally insured credit unions, something most credit unions and CUSOs, which are state-chartered corporations, have resisted. But the rue gives state credit union regulators the ability to opt out for state chartered credit unions they supervise.
