For Immediate Release
February 18, 2016
ABA Media Contact: Jeff Sigmund
(202) 663-5439
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ABA: NCUA Rule Snubs Congress and Risks Exploding Credit Union Tax Exemption

By Rob Nichols, ABA president and CEO

“We’re dismayed that NCUA continues to act as a cheerleader for the industry it’s charged with supervising.  Changing the way the business lending cap is calculated and providing a means to exponentially expand credit union business lending by selling off slices of loans is not regulatory relief – it is charter enhancement, plain and simple.  Enabling a risky loan syndication program that will allow the credit union industry to have a much higher concentration in business loans is a sharp departure from the industry’s mission to serve people of modest means. 
“Today’s action would encourage credit unions to divert their member resources to finance commercial businesses, which will lead to safety and soundness concerns.  Every new business loan generated through this proposal represents lost federal tax revenue, and would likewise harm already strapped state coffers.  This latest overreach comes on the heels of NCUA’s field of membership proposal and a promised plan for credit unions to accept investor capital, which would further the evolution of credit unions into tax-exempt banks able to serve anyone who walks through the doors with no regard for a ‘common bond.’
“Since NCUA is in the business of promoting the explosive growth of the credit union industry, rather than regulating it, we will be urging lawmakers to take a close look at what this tax-advantaged industry has become.  This rogue agency has already gone well beyond what’s appropriate by facilitating a tax exemption that currently stands at $27 billion, but will grow exponentially as NCUA continues to act as a legislative body to broaden membership, business lending, investment capital and low-income designations in ways that are beyond belief. 
“Time after time, NCUA ignores the limits that Congress has placed and pursues changes that cater to credit unions with little regard to the risks posed by their actions or the consequences for taxpayers that must bear the ultimate cost to subsidize this industry.”
The American Bankers Association is the voice of the nation’s $16 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $12 trillion in deposits and extend more than $8 trillion in loans.
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