ABA still focused on bringing down CUs

Dec. 22, 2009 – As in previous years, the American Bankers Association’s list of government relations priorities for next year includes tackling what the group calls unfair competition from the credit union industry.

The group claims that credit unions are abandoning their core mission and that it will encourage lawmakers to require credit unions “return to their core missions or formally obtain a banking charter.” The ABA will also be focused on credit unions’ tax-exempt status.

Despite the group’s stance on credit unions, Home Mortgage Disclosure Act data show that credit unions have a greater percentage of loans going to lower-income populations than banks and thrifts.

In addition, credit unions operate programs that specifically meet the needs of the underserved. For instance, NAFCU Region IV Director Randy Smith, CEO of Randall-Brooks FCU in Live Oak, Texas told the Federal Reserve earlier this month that his institution operates a free check cashing service and provides signature loans for members with short-term cash needs. While these loans, he said, generate a loss for the credit union, they are considered worthwhile, because the credit union’s core mission is to serve members, not maximize profits.