The NCUA said Thursday it will investigate five credit unions identified by national consumer advocates for offering payday loans through a CUSO partner.

The agency's commitment to act came in a letter to the National Consumer Law Center, one of the two organizations that charged that nine federally insured credit unions were involved in payday lending.

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In her letter dated June 6, NCUA Chairman Debbie Matz wrote that the agency cannot do anything directly about the five credit unions NCLC identified which refer their members to a CUSO called XtraCash for payday loans.

“NCUA has no direct statutory authority over CUSOs, or any third-party vendors,” Matz wrote. “I am very troubled that this vendor is making high-priced loans using the names of credit unions. NCUA is investigating credit union affiliation with XtraCash LLC and will take action against any credit union violating a law or regulation.”

Matz said that there is a regulation which would prohibit federal credit unions from referring their members for a fee to a payday loan provider with annual interest rates in excess of the agency's interest rate ceiling for the loans of 28%.

“NCUA will investigate each case and use every tool at our disposal to ensure the FCU's are complying,” Matz added.

Significantly, Matz wrote that the other four credit unions mentioned in the NCLC letter “are either offering an alternative to predatory payday loans in accordance with NCUA's rule or are offering a lending product in accordance with Regulation Z.”

XtraCash's general manager, Asa Groves, said after the original complaint from the NCLC that his company allows its client credit unions to help members meet emergency financial needs and that the CUSO makes the loans in a far more responsible way than do storefront payday firms.

The company had not returned a call or replied to an email seeking comment about the NCUA letter Thursday afternoon.

The CUSO is owned by CU Holding Company LLC and that, in turn, by the $495 million Mazuma Credit Union in Kansas City, Mo.

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NCUA Investigating Five XtraCash Credit Unions

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