Fact-Checking the ABA: What the Data Actually Shows on Credit Union Business Lending

www.marktreichel.com

https://www.linkedin.com/in/mark-treichel/

In this episode, Mark Treichel responds directly to a podcast released by the American Bankers Association (ABA) titled “Are Credit Union Commercial Loans Risky Business?” — a 12-minute episode that contains significant factual errors, conflates distinct regulatory mechanisms, and presents advocacy as analysis.

Mark draws on 33 years at NCUA — including eight years as Executive Director — and nearly six years in consulting to walk through eight specific claims from the ABA podcast, providing historical context, regulatory detail, and current data from NCUA call reports to address each one.

Topics Covered

Historical Background

The ABA’s 35-year campaign against credit union expansion — from the 1990 field-of-membership lawsuit argued for the ABA by then-attorney John Roberts, through the Supreme Court victory, through the congressional response with HR 1151, the Credit Union Membership Access Act of 1998, and the origin of the 12.25% MBL cap as a political compromise rather than a safety-and-soundness limit. How that cap ended up jumpstarting the credit union business lending industry — the law of unintended consequences.

Claim 1 — The 2016 Rule Change Was a Relaxation

Mark untangles two separate errors: the invented waiver mechanism for exceeding the MBL cap (which does not exist — the cap is statutory and cannot be waived by NCUA) and the conflation of the loan-level underwriting waiver process (what actually changed in 2016) with the cap itself. Over 1,000 active waivers were on file before the change; NCUA replaced prescriptive checkboxes with a principles-based framework consistent with OCC and FDIC practice.

Claim 2 — The MBL Cap Is Notional
Every exemption the ABA criticizes — low-income designation, bank acquisitions — was created by Congress, not by credit unions circumventing the system. Using a congressionally authorized exemption is compliance, not circumvention.

Claim 3 — The Low-Income Designation Explosion
The total number of federally insured credit unions fell from 5,048 in 2021 to 4,374 by year-end 2025, a decline of more than 13% in four years. A shrinking denominator drives percentage increases independent of raw count changes. NCUA outreach encouraged eligible institutions to apply for a designation they were already entitled to.

Claim 4 — NCUA Lacks Commercial Lending Expertise

NCUA has had member business lending regulations since the 1980s, updated comprehensively in 2003 and modernized again in 2016. The agency maintains specialized commercial lending examination staff, concentration risk guidance, and net worth standards that apply to commercial lending activity.

Claim 5 — Bank Acquisition Commercial Loan Comparison

When a credit union acquires a commercial bank, it acquires that bank’s loan portfolio. The finding that post-acquisition credit unions carry more commercial loans is a mathematical inevitability, not evidence of a supervisory problem.

Claim 6 — These Loans Haven’t Been Through Stress

Bank commercial real estate delinquencies peaked at 9% in 2009 and 2010 under OCC, FDIC, and Federal Reserve supervision. Current credit union commercial loan delinquency as of year-end 2025 is approximately 1% — or 0.44% using the 60-plus-day definition. Former NCUA Chairman Todd Harper has observed that well-underwritten member business loans have the ability to perform differently across economic cycles than auto or mortgage loans — diversification into business lending, done right, is a protection for the system.

Claim 7 — Small Business Satisfaction Data

The Federal Reserve Small Business Credit Survey measures satisfaction among approved applicants at institutions borrowers chose to apply to — a population filtered by membership eligibility requirements. It is not a direct comparison between institution types. Credit unions consistently score among the highest of any financial institution type in the American Customer Satisfaction Index across the full membership.

Claim 8 — The Tax Exemption and Level Playing Field

The credit union tax exemption reflects the cooperative structure: member-owned, with earnings returning to members through lower loan rates, higher deposit returns, and reduced fees. Congress has reviewed this treatment many times and has chosen to maintain it.

Takeaways for Credit Union Executives
Know the history and be prepared to counter these arguments with facts. Run a well-managed institution with strong underwriting standards and appropriate capital. Engage proactively with your exam process. Know your data. Be skeptical of statistics presented without context.

Resources Referenced

•        Credit Union Conversations podcast with Mark Ritter (episode featuring former NCUA Chairman Todd Harper and Mike Radway on HR 1151 history)

•        NCUA call report data, year-end 2025

•        Federal Register — 2016 NCUA Member Business Lending rule

•        America’s Credit Unions Governmental Affairs Conference (GAC)