ICBA urges Congress to turn up heat on credit unions in meetings this week
Credit unions hiking to Capitol Hill this week may face additional scrutiny from members of Congress — at the urging of bankers.
The Independent Community Bankers of America sent a two-page guide to all 535 congressional offices, encouraging lawmakers to grill credit unions on a variety of topics.
The banking group tied the release of the guide to the Credit Union National Association’s Governmental Affairs Conference. As part of that event, credit union executives and other industry representatives will visit their representatives on Wednesday and Thursday.
The guide is part of the ICBA's Wake Up campaign, which urges bankers to raise concerns about the regulatory oversight and tax-exempt status of credit unions.
"The guide was created as a way to raise awareness of credit union overreach and exploitation of their tax exemption and have Congress act before it’s too late," said Aaron Stetter, the ICBA’s executive vice president of policy and political operations.
"As a first step, ICBA believes that Congress needs to ask the tough questions and ultimately hold hearings on the industry for the first time in 15 years," Stetter added.
The guide highlights four areas the ICBA wants lawmakers to focus on, including recent credit union-bank mergers after a record number of deals took place last year.
Banking associations have opposed these deals, arguing that the process is unfair because it is more difficult for banks to buy credit unions. The ICBA suggested that lawmakers challenge credit unions on these transactions and to question a the industry’s tax exemption.
The ICBA also pointed out the recent partnership involving Pentagon Federal Credit Union, Goldman Sachs and two other firms that are backing an $847 million loan to help finance The Wharf, a luxury development in Washington that will include nearly 1.3 million square feet of office and residential space. The ICBA urged lawmakers to consider how this partnership serves people of modest means.
“Is it appropriate for a tax-exempt credit union to participate with investment firms like Goldman Sachs to finance multi-million-dollar properties?” the trade group wrote for one of the suggested questions.
"PenFed is proud to lend in the communities we serve and create a positive economic impact through the thousands of new jobs these developments create for low to moderate income families," a spokeswoman said in a statement.
Questioning whether credit unions are fulfilling their mission of serving people of modest means appeared in the guide. The ICBA urged lawmakers to question credit unions about whether they are located in low- and moderate-income areas and the income levels of their membership base.
Finally, the ICBA wants lawmakers to ask credit unions about the National Credit Union Administration’s proposed rule on subordinated debt, which would allow more credit unions to raise capital from investors.
The ICBA suggested that lawmakers ask if credit unions should be allowed to use that capital to buy banks and if subordinated debt would threaten credit unions’ cooperative model.