Last week the National Credit Union Administration (NCUA) — the credit union industry version of the Federal Deposit Insurance Corp. — overreached its power by unilaterally permitting 1,001 credit unions to disregard the congressionally mandated member business lending (MBL) limit of 12.25 percent of assets. Never mind that this issue currently is being debated by Congress.
NCUA determined that, based on its internal credit union assessment process analyzing 2010 Census data, that each of these 1,001 federally chartered credit unions should be designated as a low-income credit union (LICU). This designation allows them to accept nonmember deposits from any source and exempts them from the 12.25-percent-of-assets MBL limitation. Plus, any credit union that meets the requirements for LICU designation would be allowed to fail to meet those requirements for five consecutive years of quarterly analysis before having the LICU designation revoked.
In Indiana 38 federal credit unions have been granted the LICU designation. Of those, only Purdue Federal Credit Union in West Lafayette is approaching the 12.25 percent cap, as it was at 10.48 percent as of mid-August.
Most troubling is that this increase in LICU eligibility was announced as a part of the Obama administration’s drought relief measures. Nonsense! Less than 50 percent of the federal credit unions awarded the LICU designation serve any of the drought-fueled disaster areas.
Either President Obama is a willing partner of the NCUA in this deceptive use of those suffering the results of the drought, or he has been duped by the NCUA. Either way, this initiative certainly fails any test of rule-making transparency.
Powers should not be transgressed. The president should not be a skirt to hide behind, and citizens must demand transparency and fairness in governmental rule issuance.