Wis. Bankers: CUs 'Ill-Equipped' for More Commercial Lending
Pulling from a 2003 Government Accountability Office study, the Wisconsin Bankers Association offered what it considered to be evidence that most NCUA examiners do not have enough experience to effectively monitor commercial loans at credit unions.
The WBA said the GAO said it was "skeptical" that the NCUA was up to "the challenge to ensure that it is adequately prepared to monitor" the expansion of the CU commercial lending. The banking group also noted that more than 270 of Wisconsin's state-chartered CUs already have the right to petition the state's Office of Credit Unions to exceed the 12.25% member business lending cap.
"The federal legislation would circumvent an important regulatory safeguard used to determine whether a credit union has the expertise and financial strength to manage more commercial loans," according to Kurt Bauer, WBA president/CEO.
Referring to studies from the GAO and the National Community Reinvestment Coalition, Bauer also stated that "it doesn't make sense for federal lawmakers to reward the very largest and most profit-driven credit unions with more commercial lending authority when there is overwhelming evidence from independent and unbiased sources that CUs are not reaching out to underserved consumers."
The Wisconsin Credit Union League said the WBA "keeps repeating the same factual inaccuracies." The league said since the MBL cap was put in place in 1998, "there has been no evidence of systemic risk due to credit unions' business lending."