The recent WSJ piece regarding PenFed’s unsatisfactory anti-money laundering program and NCUA’s inability as a regulator to keep one of the biggest credit unions in check should be a massive reminder to members of Congress that this reoccurring issue isn’t going to solve itself.
Credit unions continually failing members and taxpayers can only be solved by improving their regulating body. The industry needs to stop pretending NCUA is doing its job, and it’s time for Congress to finally put its foot down and let the industry know there are consequences for fake regulation and oversight.
Senator Elizabeth Warren (D-MA) recently raised the need to possibly include credit unions under the Community Reinvestment Act (CRA), which would require federal regulators to assess whether credit unions are actually fulfilling their mandate to serve those of modest means, a core element of their mission. Her suggestion was a sound one indeed, as credit unions have increasingly neglected communities of modest means over the years with no consequences to their steady mission creep. If credit unions are actually serving their mission, they would have nothing to fear.
But instead, what was the credit union industry’s response to Sen. Warren? Full-blown panic, attacking her character and her credibility (and in turn proving they are scared of the possibility of being held accountable to their chartered mission). But Sen. Warren is clearly onto something. NCUA was created to hold credit unions accountable, though as we’ve seen, they just aren’t living up to that responsibility. So if the industry’s regulator isn’t going to do it, then someone else needs to – and that can’t just be one member of Congress.
We need Congress to do its job too. Large credit unions are exploiting the tax system and putting American taxpayers at risk. If Congress wants to protect consumers, they need to immediately reevaluate the credit union tax exemption and if it is being used for the right purposes.