Community banks are confronted with blatant discrimination and disadvantages when competing against credit unions and Farm Credit System (FCS) banks. The Community Bankers Association of Illinois (CBAI) has urged the Federal Reserve Board (Fed), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) (collectively, Regulators), to aggressively and publicly advocate for community banks and to emphasize to the National Credit Union Administration (NCUA) and the Farm Credit Administration (FCA) that there needs to be a level playing field.
Regulators, however, have stated that these are “political” and not “regulatory” matters and they should not get involved, particularly with other agencies. CBAI strongly disagrees with this very narrow interpretation of Regulators’ responsibilities.
The loss of customers to credit unions and Farm Credit System lenders hurts community bank deposit and loan growth, earnings, and credit risk, which negatively affects their safety and soundness and the health of the banking profession. CBAI has emphasized that the Regulators’ stated mission is to ensure the safety and soundness of the financial institutions they regulate. Therefore, it is entirely and rightfully within the responsibility of the Federal Reserve, FDIC and OCC to advocate, in the strongest possible terms, against the NCUA’s and the FCA’s harmful discrimination against community banks. CBAI recommends that the Regulators embrace this responsibility and immediately begin an aggressive and public advocacy effort. Read Letter to Regulators.