A Follow-up to Operation Choke Point - NCUA Doesn’t Dictate Businesses CUs Can Serve

 

In response to a letter from House Financial Services Chairman Jeb Hensarling (R-Texas), NCUA Board Chairman Debbie Matz wrote that the NCUA has not and will not participate in Operation Choke point.

“NCUA does not dictate which businesses credit unions can serve as long as these businesses are legal and within the credit union’s field of membership, and the credit union can serve them safely and soundly,” she wrote in the letter dated April 15. “Going forward, the NCUA will continue to ensure that all our material and guidance clearly outline these policies.”

Matz explained that the NCUA issued a memorandum to all field staff in August of 2014, which stated the agency’s policy for opening and closing accounts is a decision generally left to the credit union.

“The decision may be based on a credit union’s particular business objectives, its evaluations of the risks associated with offering particular products or services and its capacity and systems to effectively manage those risks,” she wrote.

Mike Schuetz, owner of Hawkins Guns LLC in Wisconsin, has claimed the $272 million Heritage Credit Union in Madison, Wis. closed his account due to Operation Choke Point. Schuetz recorded a conversation with a branch manager who said the credit union was being pressured by regulators.

“They came in, looked at our books, looked at everything and said, ‘Here's some accounts we feel like we’re going to regulate you on,’ and they kind of put the screws to us on what we could and couldn't do type thing,” a manager stated in the recording. “We’re not anti-gun as a company but our hands are tied.”

Heritage’s CEO Anita Rauch told CU Times the account was closed for other reasons.

“Our position all along has been our inability to serve Mike at Hawkins Guns was simply a temporary situation,” she said. “It's not reasonable to think you can buy the software, plug it in and it just works. It takes a little bit of programming.”

Rauch said the credit union’s assets grew to $100 million in three years so the amount of monitoring for cash intense businesses increased.

“We began working on accommodating cash intense businesses no matter what the type of business. It wasn't strictly directed at guns or gun shop owners,” she said.