In a letter to House Financial Services Committee leaders today, the American Bankers Association expressed opposition to a bill that it called a “backdoor effort by the credit union industry to expand its membership rolls at the expense of tax-paying banks.” The Expanding Financial Access for Underserved Communities Act would allow credit unions to further expand the already broad field of membership requirements under the premise of promoting access to banking services for low and moderate-income communities.
However, ABA pointed out that credit unions “have ample opportunity to serve additional communities under their existing authority,” and that “they have not stepped up” to provide services to LMI communities. Specifically, ABA pointed to recent data suggesting that credit unions tend to open more branches on net in upper and middle-income census tracts and close more branches in LMI areas. They are also not held to the same stringent Community Reinvestment Act requirements that taxpaying banks adhere to.
The association added that the National Credit Union Administration’s recent expansions of credit union field-of-membership rules already provide ample tools for credit unions to serve underserved communities if they so choose. “NCUA rules require communities added to a credit union’s field of membership to be geographically contiguous to a credit union’s existing footprint, a condition that does not appear to be required by this legislation,” ABA noted. “This could suggest that the real motivation for this legislation is to enable credit unions to establish out-of-market footprints, rather than to serve low-income people close to home.”
The bill comes amid a concerning increase in credit union acquisitions of taxpaying banks—with more than 50 such transactions announced since 2013. ABA continues to call for CRA-like regulatory requirements for credit unions and for Congress to take action to block acquisitions of taxpaying banks by tax-exempt institutions.