At least one organization thinks the seizure of Telesis Community Credit Union exemplifies the reason credit unions shouldn’t be allowed to expand their member business lending authority.
News Update, April 2, 2012, Telesis Management Taken Over By Premier America
In fact, the Independent Community Bankers of America says the expedited Senate bill that would authorize lifting the cap “threatens the entire credit union sector.”
The ICBA issued a statement Monday that said, “Allowing credit unions to expand their member business lending parameters could put many smaller credit unions into precarious situations, which could lead to failure. We saw firsthand last Friday what can happen when credit unions try to navigate these uncharted waters when Telesis Credit Union (sic), Chatsworth, Calif., failed.”
The trade group said Telesis was granted a waiver to exceed its cap, which resulted in the credit union “doing multimillion dollar commercial loans all around the country, including a failed Orlando, Fla. shopping center.”
The ICBA statement added, “Senators should ask if this sort of risky lending activity, which would increase if S. 2231 were to pass, is consistent with Congress’ intent of ensuring that tax subsidized credit unions serve people of modest means.”
The community bankers’ statements also took a shot at reports of million dollar salaries at some credit unions.
“Meanwhile, news broke that the CEO of Public Service Employees Credit Union in Denver received more than $11 million in compensation in 2010 and that the CEO of Telesis brought home $2.1 million—a hefty pay package for institutions originally designed to serve people of modest means,” the statement said.
“Yet, at exactly the time when Telesis Credit Union was being put into conservatorship and Saguache Credit Union was being liquidated, the Senate may consider a process so S.2231 would not have to go through the Senate Banking Committee,” it said.
“ICBA urges the Senate to examine these current events as they consider S. 2231. There is a litany of reasons why allowing credit unions further mission creep into the area of member business lending is a flawed and dangerous idea,” the trade group said.