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The
proposal would ease restrictions on who may join credit unions:
member-owned lenders that typically form around a common
employer, hometown or other shared class.
The industry regulator, the National Credit Union Administration
(NCUA), is due to vote Thursday morning and industry leaders
foresee a decision in their favor.
"We expect the NCUA to ease unnecessary regulatory
restrictions," said Carrie Hunt, a lobbyist for the National
Association of Federal Credit Unions, a leading trade group.
In regulatory jargon, credit unions may only form around a
"well-defined local community" but proponents of reform say
technology has helped widen the meaning of that term.
"The internet has changed everything for lenders," said Ryan
Donovan, lobbyist with the Credit Union National Association.
"This only modernizes some arcane requirements."
The details of the reform will be outlined at a NCUA board
meeting but the regulator has proposed easing geographic limits
on credit union membership and allowing more contractors to join
employer-affiliated lenders.
One proposal would also encourage credit union expansion into
poor and rural communities by easing tests for whether those
regions are underserved by other creditors.
The roughly 6,000 credit unions in the United States are a
relatively small part of the national financial system.
Their roughly $1 trillion in total assets is only about 2/3 of
the total holdings of JPMorgan Chase & Co <JPM.N>, one of the
nation's largest banks.
Leading bank industry trade groups, though, have opposed plans
to allow credit union expansion.
Congress always intended to limit the power of credit unions and
keep them tethered to small groups of people with a strong,
common bond, according to the American Bankers Association.
"Unfortunately, the NCUA proposal totally ignores two key
phrases, 'well-defined' and 'local', out of its statute in order
to drastically expand credit union powers," the bank trade group
wrote lawmakers early this year.
(Reporting By Patrick Rucker; Editing by Bernard Orr)
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