NAFCU Calls for Regulatory Relief for Credit Unions

WASHINGTON--(BUSINESS WIRE)--Mike Lussier, president and CEO of Webster First Federal Credit Union in Webster, Mass., testified today before the House Financial Services Committee on behalf of the National Association of Federal Credit Unions (www.nafcu.org). Lussier, who serves as NAFCU’s treasurer and a director-at-large, outlined the association’s recommendations for regulatory relief and improvements for credit unions.

“Credit unions are more heavily regulated than any other consumer financial services provider,” said Lussier. “Restrictions on the operations of credit unions limit not only who can avail themselves of credit union services, but also how credit unions can raise capital.”

Yet Lussier emphasized, “America’s credit unions have always remained true to their original mission of 'promoting thrift' and providing 'a source of credit for provident or productive purposes.' Credit unions are second to none in providing their members with quality personal service at the lowest possible cost. According to the 2005 American Banker/Gallup Consumer Survey, credit unions had the highest rated service quality of all covered financial institutions. This has held true each year since the survey was initiated.

“Furthermore,” Lussier stated, “while many banks and thrifts have helped to create the recent subprime mortgage debacle by placing many into predatory subprime mortgage loans, data collected under the Home Mortgage Disclosure Act illustrate that credit unions are not part of the problem. The difference between credit unions and banks is highlighted when one examines the 2006 HMDA data for loans to minority applicants with household incomes under $40,000. According to the 2006 HMDA data, banks charged at least 3 percent higher than the comparable Treasury yield on 34.2 percent of loans made to minority applicants with household income under $40,000. Credit unions, on the other hand, were only outside of the yield spread on 4.7 percent of their loans.”

Lussier added, “The state of the credit union community is strong and the safety and soundness of America’s credit unions is unquestionable. Nevertheless, there is a clear need for easing the regulatory burden on credit unions as we move forward and the financial services marketplace becomes more innovative. It has been 10 years since Congress has enacted major credit union legislation. Credit unions need comprehensive regulatory relief.”

One particular area where current restrictions present a significant challenge is serving the underserved. Lussier testified, “Credit unions play an important role in helping those that other financial institutions have turned their backs on and left behind. NAFCU supports making a necessary clarification to the Credit Union Membership Access Act (CUMAA)…to clarify that credit unions are able to add underserved areas to their fields of membership, regardless of charter type.

"Since the passage of CUMAA in 1998, federal credit unions have added over 1,500 underserved areas, making low-cost financial services available to over 150 million people. However, with the necessary clarification to CUMAA, credit unions will be able to do even more in providing service to the underserved.”

Today, Lussier stated, “NAFCU believes that the Credit Union Regulatory Improvements Act (CURIA), introduced last March by Reps. Paul Kanjorski, D-Pa., and Ed Royce, R-Calif., is a fundamental step toward comprehensive relief, as it addresses many of the regulatory burdens and restrictions on federal credit unions.” Lussier added that, “NAFCU strongly believes that CURIA, which has over one-third of the House as cosponsors and continues to gain support, is the best vehicle to accomplish this. We also recognize that H.R. 5519, the Credit Union Regulatory Relief Act, is an important non-controversial first step at regulatory relief and should be passed by the Committee in short order.”

Ultimately, Lussier emphasized, “NAFCU believes this support demonstrates a clear recognition of the need to modernize credit union net worth standards, advance credit union efforts to promote economic growth and modify credit union regulatory standards. CURIA is a balanced and common-sense regulatory relief bill that addresses the important issues that America’s credit unions are currently facing. Enactment of CURIA would improve the ability of credit unions to better serve their members and promote economic growth within their communities.”

NAFCU is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.

For the latest in credit union information, visit our website @ www.nafcu.org