The National Credit Union Administration board approved an ICBA-opposed final rule that will allow the largest and most complex credit unions to issue subordinated debt to institutional investors.
Under the rule, the subordinated debt instruments count toward qualifying credit unions’ risk-based net-worth requirement. While low-income credit unions are already permitted to issue subordinated debt, the rule will add an additional 285 complex credit unions representing $730 billion in assets, ICBA said in its comment letter earlier this year.
In a news release, ICBA said the rule is another example of the NCUA expanding credit union powers well beyond limits justifying the industry’s tax exemption.
“The NCUA’s rule would undermine credit unions’ mutual ownership structure, allow outside investors to exploit the credit union tax subsidy, and fuel runaway growth of an industry that has abandoned its founding mission to serve people of modest means," ICBA President and CEO Rebeca Romero Rainey said.
ICBA continues raising awareness of credit union mission creep and the NCUA's overreach through its "Wake Up" campaign and Credit Union Task Force.
