The American Bankers Association is complaining to regulators that a Seaford-based credit union is operating with overly loose membership practices.
According to a blog post in the ABA Journal, Sussex County Federal Credit Union allows membership through a foundation for those who would not otherwise qualify. The post goes on to claim that continued membership in the foundation is not a requirement for remaining with the credit union.
The bankers group has made a complaint on the practice to the National Credit Union Administration.
Sussex Federal has offices in Seaford, Milford, Lewees and Millsboro.
Many years ago, credit unions won the right to widen their membership field to includes entire communities and even counties.
Previously, fields of membership were often limited to employees and their families of companies and organizations.
In Delaware, community credit unions became the norm as the member-owned organizations serving employers like DuPont, Chrysler, and General Motors experienced sharp declines in employment.
Bankers fought back with demands that member-owned credit unions pay income taxes and go back to narrower fields of membership.
Credit unions responded by making the case that their organizations provide financial services for those who cannot afford bank fees or do not qualify for loans. They also see the broader charters as a necessity in providing a wider range of services that now include online banking apps and access.
Meanwhile, smaller community banks that compete more directly with credit unions are becoming less common, due to regulatory requirements brought on by the financial crisis. That has brought on a wave of mergers in Delaware and elsewhere.
Sussex is something of an exception to the trend with locally owned County Bank and Community Bank operating in the county.
Credit unions have also merged in Delaware and elsewhere, due to regulatory requirements and the need for a broader membership base.
The most recent merger involved the Newport Site Federal Credit Union, which served BASF employees and their families and Del-One Federal Credit Union. Del-One has grown into one of the state’s largest credit unions.
