Bankers to Congress: Turn up the heat on CUs during Hill visits
Credit unions hiking the Hill this week may face additional scrutiny from members of Congress at the urging of bankers.
The Independent Community Bankers of America sent out a two-page guide to all 535 congressional offices, encouraging lawmakers to grill credit unions on certain topics.
The banking trade 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 others from the industry will be visiting their representatives on Wednesday and Thursday.
ICBA’s guide is part of its Wake Up campaign, which urges bankers to raise concerns about the credit union industry regarding regulatory oversight and its tax-exempt status with policymakers.
"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 trade group's EVP 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."
The guide highlights four areas for lawmakers to ask credit unions about, including the recent trend of credit unions buying banks. There were a record number of credit union-bank deals in 2019. Bank associations have opposed these deals, arguing that it’s partly unfair because it's far more difficult for banks to buy credit unions. ICBA suggested lawmakers challenge credit unions on these transactions and to question a CU’s tax exemption.
The banking trade group also pointed out the recent partnership between Pentagon Federal Credit Union, Goldman Sachs and two other firms thatare backing an $847 million loan to help finance The Wharf, a luxury development in Washington that will include 1.25 million square feet of office and residential space. 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?” ICBA 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," according to a PenFed spokesperson.
Questioning whether credit unions are fulfilling their mission of serving people of modest means appeared in the guide as well. 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 banking association wants lawmakers to ask credit unions about the National Credit Union Administration’s proposed rule on subordinated debt, which would allow credit unions to receive capital from investors. One suggested question was if credit unions should be able to use subordinated debt to purchase a bank. Another inquired if subordinated debt would threaten the cooperative model of credit unions.
This story was updated at 9:28 a.m. on Feb. 27, 2020.