In a comment letter to the National Credit Union Administration (NCUA), CBAI urged a halt to their rulemaking regarding supplemental capital for credit unions. Read Comment Letter.
CBAI found fault with the reasoning that because of a lack of specific statutory authority the NCUA is permitted to promulgate capital rules and authorize alternative capital instruments for credit unions. Congress should decide whether the actions contained in the NCUA’s proposal are permissible, but this authority has not been given. Absent such authority, the proposed rulemaking represents an abuse of the NCUA’s authority, a blatant expansion of powers, and a costly and unfair increase in the credit union industry tax subsidy.
In the comment letter, CBAI urged the NCUA to focus on the founding mission of credit unions: enabling people of modest means and with a common bond to pool their resources to meet their basic deposit, savings and borrowing needs through a mutual ownership structure. Yet, CBAI noted that credit unions have long since strayed from their founding mission and the supplemental capital proposal would result in credit unions having an ownership structure similar to most taxpaying banks with a category of investors whose interests are inconsistent with those of its mutual owners.
CBAI recommended the credit union industry’s tax subsidy should be eliminated and credit unions should pay their fair share of income taxes. Read Comment Letter.