Following Navy Federal Credit Union’s announcement that its overseas military banking program will be called “Community Bank,” ICBA urged regulators to issue cease-and-desist orders directing the institution not to refer to itself as a bank.

Background: The $168 billion-asset institution said it is calling its program to operate overseas military installations “Community Bank, Operated by Navy Federal Credit Union.”

ICBA Statement: ICBA President and CEO Rebeca Romero Rainey said:

  • The FDIC and National Credit Union Administration should immediately issue cease-and-desist orders given NCUA legal guidance has determined that federal law does not explicitly permit insured credit unions to refer to themselves as banks or banking organizations.

  • Federal agencies should ward off any attempts to conflate a bank with a credit union, which would likely result in confusion among servicemembers.

  • It is not clear whether this new breed of institution will be examined by the NCUA, be subject to federal fair lending laws, or provide federal insurance.

Divergent Standards: “Imitation is the sincerest form of flattery, but Navy Federal — which has been subject to multiple congressional inquiries following CNN’s reporting of racial disparities in the lender’s mortgage approval rates — appears to be trying to mask the fact that it is a global financial institution that does not pay taxes or meet the same level of regulatory standards as real community banks,” Romero Rainey said.

Grassroots Resources: Community bankers can use ICBA’s Be Heard grassroots action center to call on their members of Congress to hold a hearing on the NCUA’s lax oversight. Additional resources on credit union policy are available on the ICBA website.