Capital Corner: Consumer criticism puts credit unions in the hot seat
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Thanks to a flurry of critical news coverage, the image of credit unions being a pro-consumer beacon is being questioned on Capitol Hill and in DC regulatory agencies. The question: is this a tectonic political shift, or temporary criticism that will dissipate in a short period of time.
It’s well known that Navy Federal Credit Union has been in the headlines, and now, for the first time in decades, Members of Congress are saying this is the time to consider putting new lending requirements on credit unions. At a June House Financial Services Committee hearing with Consumer Financial Protection Bureau Director Rohit Chopra, Congressman Emanuel Cleaver (D-MO) raised the issue of alleged lending discrimination by Navy Federal Credit Union and asked for Chopra’s views on applying a “similar process to CRA that would be used in credit unions like Navy Federal.”
Two weeks later, at another Committee hearing, Congressman Steven Horsford (D-NV), Chairman of the Congressional Black Caucus, raised the Navy Federal issue in the context of legislation he is working on: “I led a letter demanding answers to reporting that… there were potentially discriminatory lending practices” at Navy Federal. Horsford noted that he and Rep. Cleaver are drafting legislation to unearth additional information about credit union lending practices.
Credit union overdraft protection fees are under scrutiny by DC think tanks and, in the media, adding another layer of complexity to the political landscape facing the industry. In a series of tweets by Brookings Institution financial services fellow Aaron Klein, he has criticized what he terms “disproportionate” ODP fees by larger credit unions relative to those charged by banks.
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