Last month, I talked about the changes we are making in order to remain independent and competitive. Not only do we have to compete against the “Big Five” largest banks, regional banks, community banks, other credit unions, and nonbanks such as Walmart and Quicken Loans, but now our federal regulators are currently reviewing an application from a clean energy company to charter a new credit union to fund clean energy loans for its customers.
“Clean Energy” has become an umbrella term for all the different types of energy that do not pollute the atmosphere when used. In other words, clean energy is any type of energy not originating from coal or oil. Renewable energy includes wind, solar, hydro, geothermal, and to some, nuclear. While this is not a debate on climate change, I think we can all agree less air pollution is good.
The problem is the NCUA, the federal regulator overseeing all federally-insured credit unions in the nation, is considering a charter to an entity for the sole purpose of funding clean energy loans that most credit unions can do today. Many California taxpayers who have financed solar panels on their residences are already experiencing a form of this on their property tax statements. These solar companies hoodwinked the California Legislature into believing they were the only one capable of making these loans. We have seen examples of 90-year olds financing solar panels with 20-year terms that have to be paid off when the borrower/taxpayer dies or their first mortgage loan pays off or is refinanced. Is this responsible financing? I think not.
The solar companies have convinced our state representatives that credit unions are against clean energy. This is a fallacy. Credit unions are very much in favor of clean energy and can do a much better job of financing loans for solar panels, air conditioning systems, wall and attic insulation, LED lighting, and window and door sealing. After all, our business is to lend money to regular people with the personal service they cannot get at larger banks.
There are some other significant areas of disagreement with the NCUA should they approve this charter application. First of all, the proposed credit union will be located in Colorado but will serve a nationwide audience. While virtually every other credit union serves a well-defined community or membership group, the applicants want all 320 million of us as potential members. This smacks right in the face of local operation and ownership and keeping dollars in the community which is the bedrock of the credit union industry. Secondly, there is no defined membership. Being a customer of a clean energy company is not a valid common bond by any measure.
We’ll see what happens. If NCUA approves the clean energy company’s application, the entire credit union landscape will change. Who will apply next to operate a credit union? Walmart? Amazon? Google? If that happens, there will be some changes that none of us want.