NAFCU President and CEO Dan Berger wrote to Federal Reserve Board Governor Michelle Bowman regarding her Wednesday speech discussing competition in financial services. In the letter, Berger highlighted that “NAFCU wholeheartedly agrees that credit unions play a unique and competitive role in the marketplace,” but explained that they are more heavily regulated than community banks in several important respects.
Berger noted that credit unions are bound to the communities they serve and continue to fill voids left by bank branch closings. Berger also added that credit unions play a vital role in fostering competition in the financial services industry since credit unions typically offer better rates. A recent study estimated that bank customers derived an estimated $8.7 billion annually last decade from this competition, while concluding that credit unions add up to $12 billion in GDP annually.
Berger said that although credit unions play “a competitive – and positive – role in the marketplace, credit unions are also highly regulated institutions.” Gov. Bowman noted the recent rise in credit unions offering commercial lending products during her speech but failed to mention the 12.25 percent business lending cap placed on credit unions. Berger also stated that only 5.9 percent of the credit union industry’s assets are business loans, compared to 15.4 percent of community bank assets.
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