ABA Urges Bankers to Oppose NCUA CUSO Proposal

The ABA is calling on bankers to write to the National Credit Union Administration (NCUA) to oppose a proposed rule that would expand the range of permissible lending activity for credit union service organizations (CUSO). The proposed rule would allow CUSOs to originate any type of loan a federal credit union may originate, including auto and payday loans.

The proposal also seeks comment on broadening federal credit unions’ investment authority in CUSOs. As CUSOs may serve people who are not members of a credit union, the expanded authority would undermine credit union field-of membership restrictions.

The proposal also creates safety and soundness and consumer protection risks, as NCUA has no examination or oversight authority over CUSOs, so there is no mechanism to hold them accountable for unsafe and unsound practices or violations of federal consumer financial protection laws. Comments on the proposal are due March 29. ABA has provided a sample comment letter for bankers to easily complete and send through its grassroots platform, Secure American Opportunity. Take action now.

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