A commission assigned to study the credit union industry's viability warns that credit unions will become progressively irrelevant unless they are given broad authority to expand their fields of membership, make more business loans, and merge more freely.

The Renaissance Commission, a 27-member group appointed last June by Credit Union National Association chairman David Maus, says in a newly issued report that the "rapidly changing environment is likely to render any credit union that holds on to the status quo a nonplayer, and quickly." The commission's chairman, Frank Pollack, chief executive officer of $3.9 billion-asset Pentagon Federal Credit Union in Alexandria, Va., said: "We need to define ourselves from a strategic point of view. We want credit unions to come together as an industry and a movement and say, 'This is how we see ourselves.' "

Credit unions feel particularly vulnerable right now. In the past five years, hundreds of federal credit unions have switched to state charters to take advantage of more permissive laws in their states, and nearly 25 have converted to mutual savings banks or are in the midst of such a conversion.

Mark Wolff, senior vice president for communications at the CUNA, the nation's largest credit union trade association, said the untitled report will probably guide the Washington association's legislative and regulatory strategy. It leadership has yet to adopt the document officially, but committees in the organization are using it as the basis for a series of legislative and regulatory proposals based they are developing.

Though Mr. Wolff characterized the 20-page report as a plea for self-determination, critics said the proposed changes would further blur the differences between credit unions and banks while preserving the credit union industry's tax exemption. Edward Yingling, chief lobbyist for the American Bankers Association, said credit unions are asking for a lot, but do not seem to be willing to give anything up.

"Basically, we're pleased that the report is out in the open, because it eliminates any linkage to the historical mission of credit unions and what they were created to accomplish," Mr. Yingling said. "In retrospect, I think" the credit union industry "is going to find that it's made a mistake," he said, and the report "affirms what we've been telling Congress about the direction in which credit unions are heading."

Perhaps the most sweeping change addressed in the report concerns credit unions' traditional role of serving low-income consumers. The report states that "it is time to declare victory in achieving this mission." And while it says credit unions will continue serving "those of modest means," it explicitly rejects attempts by regulators to "define, direct, or examine the social mission of credit unions."

The report also aims to ease mergers, urging that regulators relax restrictions on deals. For instance, regulators often block deals if merging credit unions' fields of membership differ significantly.

Mr. Wolff said the Renaissance Commission report was intended as a "guiding vision," not an agenda. It asks state and federal regulators to focus primarily on safety-and-soundness issues, while leaving to the credit unions themselves such thorny matters as field of membership, business lending, mergers, and loan sales.

The CUNA's board of directors is scheduled to vote on the report at the association's annual meeting in September, Mr. Wolff said.

Mr. Pollack dismissed suggestions that the report points to a radical change in the way credit unions have been governed for the past seven decades.

"I'd call the proposals evolutionary in nature," he said. "If we can't change with the times, we won't be able to survive."

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