GAO Report Calls for Greater Transparency at Credit Unions

The United States Government Accountability Office (GAO) issued a report last week concerning overall accountability and transparency at the country’s credit unions.

Specifically, the report:

1. assesses the effect of the Credit Union Membership Access Act on credit union membership and charters,
2. reviews the National Credit Union Administration’s (NCUA) efforts to expand services to low- and moderate-income individuals,
3. compares rates offered by credit unions with comparably sized banks,
4. discusses unrelated business income tax issues, and
5. assesses transparency of credit union senior executive compensation.

To address these objectives, the GAO obtained NCUA data on credit union membership, charter changes, efforts to target those of modest means, and executive disclosure requirements. The GAO also analyzed Federal Reserve Board’s Survey of Consumer Finances and Internal Revenue Service data.

Findings

Since the passage of the Credit Union Membership Access Act (CUMAA) in 1998, larger community-based credit unions have constituted a much greater proportion of the industry. NCUA has approved federal community charters with increasingly larger geographic areas and potential for economically diverse membership. Much of the shift toward the larger community-based credit unions was due to conversions from other charters. NCUA’s approval of these charters appears to have been triggered by changes in the economic environment and financial services industry and to diversify membership to accomplish goals such as increasing service to those of modest means.