NCUA's new congressional staff is getting a workout right away.
U.S. Rep. Bill Thomas of California, the outgoing chairman of the tax-writing Ways and Means Committee, turned his ire on the credit union regulator again after remarks by new NCUA Board member Gigi Hyland were brought to his attention in which Hyland urged credit unions to make sure Congress knows of the good works of credit unions in serving the underserved. Thomas thought the remarks suggested that NCUA plans to try and shape the data it is now collecting on service to the underserved, partially at Thomas' urging.
So Thomas sent a scathing letter to NCUA Chairman JoAnn Johnson questioning whether NCUA is capable of acting in an unbiased way in collecting the data, and he called on the congressional watchdog, the General Accountability Office to investigate.
"As indicated at the Committee's (November) hearing, I have been concerned about the independence and objectivity of the NCUA," said Thomas in a March 22 letter to Johnson. "Your testimony at the hearing only added to my concerns that the NCUA has too often been a promoter and defender of credit unions, rather than a vigilant regulator."
Thomas referred to news reports quoting Hyland as referring to the data collection "as a chance for credit unions to frame the argument themselves," and "a way for credit unions to compile a collection of feel-good stories and sound bites."
Citing a 2004 court ruling criticizing NCUA for being an industry "cheerleader," Thomas said, "We do not need a cheerleader collecting and analyzing information about whether credit unions are fulfilling the goals intended with their tax exemption. I ask that you be mindful of your proper role as an independent and objective regulator of credit unions as you move forward with your data collection project."
Hyland didn't deny she is a supporter of credit unions but said she thought the term "cheerleader" used by Thomas was too strong. "It is our role, as a regulator, to ensure that credit unions have a viable place in the financial marketplace, just as every other regulator," she said, insisting that NCUA will objectively use whatever data is collected in the member services project.
Efforts to calm the situation have kept NCUA's new congressional liaison John McKechnie and his newly hired assistant lobbyist, Anne-Marie Kelley, busy.
The two are also working on what may be called a counter-lobby. That is, they are meeting with key members of Congress in the wake of lobbyists for DFCU Financial, to assure those lawmakers that NCUA will be fair and impartial while refereeing the conversion of the $1.8-billion credit union giant, the biggest ever to seek a bank charter. Lobbyists for DFCU Financial, pointing to last year's controversy over two Texas conversions to banks, are trying to plant the idea among lawmakers that NCUA is predisposed to try to stop credit unions from converting to banks. As a result, Congress is keeping close watch on the DFCU Financial conversion.
McKechnie said he is trying to explain to lawmakers that NCUA's main concern is that credit union members voting on conversions are provided with full and fair disclosures in time for them to make an informed decision on their ballots. NCUA's position, said McKechnie, "is that it's up to the members to decide. We just want to make sure they're given all of the necessary information to make that decision."
Ball In Their Court
The ABA had some last fun week at the expense of credit unions and NCUA.
The bankers sent a basketball to each of the 435 members of the House with the message, "End the Madness: Oppose CURIA" inscribed on it. The message, which was due to coincide with last month's college basketball tournament known as "March Madness," was accompanied by letters to each House member and an ad running Wednesday in the Capitol Hill newspaper "Roll Call" urging lawmakers to reject the credit union lobby's efforts to expand credit union powers under the CU Regulatory Improvements Act.
The bankers claim that credit unions should not be allowed to expand their powers, since there is no evidence that credit unions are serving members of modest means.
A clearly unamused CUNA President Dan Mica tried to deflate the bankers' prank. "We find the ABA's memo to House members offensive at the worst, and childish and immature at best," said Mica. "Essentially, they are attempting to exploit a great American sporting event by twisting it to their own agenda of boxing in credit unions and preventing better financial service to America's 87 million credit union members."
