CU issues addressed in NAFCU-Fed meeting

Dec. 8, 2009 - Credit unions are going above and beyond to help struggling members in a tough economy despite their own difficulties, NAFCU Board members told Federal Reserve Board Gov. Daniel Tarullo and Vice Chairman Donald Kohn Monday.

Meeting with Tarullo and Kohn at the Fed’s headquarters, the NAFCU Board members presented a written report to the Fed and discussed a wide range of issues, including the impact of the economy on credit unions, regulations, the potential impact of financial services legislation and credit unions’ service to low- and moderate-income individuals.

Here’s are some of the highlights:

• Consumer Financial Protection Agency proposal: NAFCU Board members expressed their support for using such an agency to regulate financial entities that are currently unregulated. NAFCU Director-at-Large Ed Templeton (SRP FCU, North Augusta, S.C.) said credit unions should not be subject to new regulation or added costs in connection with that.
  
  Region IV Director Randy Smith (Randall-Brooks FCU, Live Oak, Texas) said being subjected to CFPA regulation would be particularly onerous for small credit unions. Credit unions, including his own, $3.5 billion-in-assets institution, already face overwhelming regulatory challenges, he said.
  
  
• Low- and moderate-income areas: Smith cited Home Mortgage Disclosure Act data which show credit unions have a greater percentage of their loans going to lower-income populations than banks and thrifts. And he said credit unions do much more than the data indicate.
  
  For example, Smith said his own credit union helps low-income members by regularly cashing checks for free – a service that carries a prohibitive cost at a payday lender – and issuing signature loans to assist with short-term cash needs. The loans, some for just $20, generate a loss for the credit union but are considered worthwhile because the credit union’s core mission is to serve members, not maximize profits.
  
  
• Homeowner assistance: NAFCU Board Chair Brad Beal (Nevada FCU, Las Vegas) said his credit union is doing everything it can to keep members in their homes; these include loan workouts and significant interest rate cuts. But he said some cannot be helped because their situations are too dire.
  
  
• Corporate credit unions: A spirited discussion took place on the state of the corporate credit union system and its impact on natural person credit unions. NAFCU President Fred Becker said credit unions will be paying for years. As for the future of the corporate system, he noted small credit unions in particular need the services corporates provide.
  
  
• Fed services: The NAFCU Board gave these services and the Fed’s pricing of them high marks, with At-Large Director Cutler Dawson (Navy FCU, Merrifield, Va.) noting they are “an important part of credit union services.”

This was the 17th annual meeting at the Fed for NAFCU’s board. For the 2009 written report, use the link below.