Page 13 - October 24, 2024 Bulletin

Rob Nichols
President and CEO
American Bankers Association
nichols@aba.com

Washington Update

It’s Time to Stop Punting on Credit Union

Accountability

Football season is in full swing, and here in the nation’s stadium naming deals, when those funds could be better
capital, the home of the Washington Commanders has a spent supporting members. In addition, there have been
new name: Northwest Stadium, the moniker of Virginia- several positive policy developments in recent days that
based Northwest Federal Credit Union, which recently suggest a growing appetite in Washington for greater
inked a multi-year, multi-million-dollar stadium naming accountability and transparency for the $2.3 trillion credit
deal. union industry.

If you’re wondering how a credit union – a nonprofit, One example: In a recent policy statement, the FDIC
tax-exempt entity – can afford such a hefty marketing signaled that it will begin requiring credit unions to
spend, you’d be asking the right question. When Congress provide additional information when applying to acquire
passed the Federal Credit Union Act authorizing the an FDIC-insured bank. Credit unions have targeted a total
creation of federal credit unions, its intention was for of more than $9 billion in bank assets so far this year, with
these institutions to serve people of modest means within 18 deals announced in 2024 alone. ABA remains deeply
clearly defined communities united by a common bond. concerned about the increasing number of these types

But times have changed. Today, many credit unions – in of transactions and the potential tax losses and effects
pursuit of endless growth – have dramatically expanded on local communities that accompany them. Regulators
their fields of membership. Northwest – whose marketing should rightfully scrutinize these deals, given that
budget ballooned by 88% from 2022 to 2023 – was founded credit unions are not subject to any federal Community
in 1947 to serve CIA employees. It now offers membership Reinvestment Act requirements.
through multiple federal agencies, as well as “hundreds of Greater accountability is also expected through an
businesses and community organizations.” upcoming rulemaking on executive compensation

Northwest isn’t the only credit union spending top-dollar transparency from the National Credit Union
on marketing to grow membership far beyond its original Administration that would require the disclosure of
scope. In fact, several of the largest credit unions now certain financial information by federal credit unions.
purport their potential membership base to be upwards of Given that credit unions are democratically controlled
330 million Americans – effectively the entire population financial cooperatives, it is essential that their member-
of the United States. owners have greater visibility into how top executives are
incentivized relative to these transactions.
If credit unions are now empowered to cast a net this wide
and compete aggressively for market share with taxpaying Regulators are not the only ones taking note – in fact, in
institutions, it’s time for policymakers to stop punting the just the past year, a total of 80 members of Congress have
ball on ensuring that these institutions are accountable publicly questioned credit union activities.
and transparent in their operations. Taking all these developments into consideration, it

ABA expressed this view in a recent letter to NCUA seems the time is right to move the chains on credit union
Chairman Todd Harper – who has himself questioned accountability. You can count on ABA to continue playing
whether credit unions should be spending so much on offense on these issues in the months ahead.

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