WASHINGTON - Banking industry officials are again complaining that the federal government is exceeding its legal authority in an effort to broaden credit union powers.
The National Credit Union Administration issued a proposal in November that would make it easier for federal credit unions to conduct activities "incidental" to their business, or in other words, provide products and services that are not expressly authorized by law but related to, or natural extensions of, what they may offer already.
Credit unions currently are permitted to offer incidental services, but may charge only enough to recoup the costs of providing them. The proposal would eliminate that restriction and let the nonprofit institutions charge more for 11 categories of products that include electronic signatures, sales of excess equipment or resources, finder services to connect outside vendors to members, financial counseling, and notary services.
The agency drew praise from credit unions and catcalls from the banking sector in more than 200 comment letters, which were due two weeks ago.
Banking representatives across the board argued that credit unions, which are exempt from taxes, should not be permitted to cut into the territory of their sophisticated bank competitors. They were particularly upset that the NCUA proposal would borrow from the incidental-powers standard for national banks and apply it to credit unions.
"The NCUA has determined that if a national bank can engage in the activity" then "a federal credit union may do so. This stretches the bounds of credibility," wrote Charlotte M. Bahin, director of regulatory affairs at America's Community Bankers.
John C. Rasmus, senior federal administrative counsel of the American Bankers Association, argued that credit union powers overall are narrow, limited only to "promoting thrift" and "creating a source of credit" for its members.
"What do notary services, signature guarantees, sale of excess capacity, finders activities, stored-value products, among others have to do with the promotion of thrift or providing a source of credit?" Mr. Rasmus wrote. "The answer is they have nothing to do with those tests."
Sour grapes, credit union officials said.
"To no one's surprise, the bankers are demanding limits on credit union powers, even as they seek greater incidental powers for themselves," wrote Eric L. Richard, general counsel of the Credit Union National Association.
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