Banks, clean up your own mess
This piece was submitted in response to an op-ed that ran on Wednesday from John Sorensen, president of the Iowa Bankers Association, that questioned the effectiveness of the National Credit Union Administration's oversight of the industry.
One of the National Association of Federally-Insured Credit Unions’ key regulatory priorities is to promote a strong, independent National Credit Union Administration.
Independence not only means a regulator that is the primary regulator of credit unions, but also one that acts autonomously. Independence, though, does not mandate an absence of accountability to stakeholders.
NCUA is charged with fulfilling its statutory duty, as both a safety and soundness and functional regulator, and in carrying out those duties, the agency must seek out feedback from credit unions, trade associations and other agencies alike. Bankers and banking trade associations have long accused the NCUA of being a "cheerleader" for the industry. A close look at the history of NCUA policy, however, shows that these assertions are false.
As predictable as the bankers' argument is, it is still surprising how brazen they are with their omission of facts. And those facts speak more about the hypocrisy that exists within them. It is no wonder why the banking industry’s reputation has fallen again.
Not only do fines stemming from the financial crash of 2008 continue to climb, but reports show banks have benefited from a $21 billion-dollar tax windfall following the recently passed tax reform bill. When they were lobbying for tax reform, they claimed that they would reinvest those savings into their communities. What did the banks do instead? They loaned less, fired by the thousands and padded shareholders' pockets.
Instead of claiming that credit unions are hurting community banks, community banks should look to their own industry.
The NCUA's role is to provide, through regulation and supervision, a safe and sound credit union system, which promotes confidence in the national system of cooperative credit in addition to protecting consumer rights and member deposits.
Nowhere does it say that the NCUA must deny any merger or acquisition. Nowhere is there an expectation of the NCUA to oversee its industry in a way that would essentially cripple its growth in an evolving world.
NCUA has taken steps in recent years to modernize its regulations and help create an environment for credit unions to thrive – but that environment is still a heavily regulated one. Since 2010, the number of credit unions have declined by over 25 percent at a pace of roughly one per business day.
Don't let them fool you – Wall Street is better capitalized and more profitable today than it has ever been in history. Bankers' goal is to discredit and weaken the credit union industry by any means necessary.
But we have every intention of keeping our foot on the pedal, reminding consumers that the credit union industry is the better alternative. NAFCU will continue to support a strong NCUA with a full three-member board, nominated by the president and confirmed by the Senate.
It is time we all get down to business.