WASHINGTON–The credit union-supported “Expanding Financial Access for the Underserved Act” (HR 7003) passed out of a House committee earlier this week but only after banking groups across the country raised objections.
In a letter to the committee on behalf of state bankers associations in every state, the American Bankers Association called on Congress to oppose the bill, which allows FCUs to expand into underserved areas, among other changes credit unions have sought.
As CUToday.info has reported, credit unions have strongly advocated for the bill, which passed out of committee along with another bill that gives NCUA oversight authority over third-party vendors, that credit unions oppose. The bill has now gone to the full House and would still require Senate passage to become law. It would likely need to be attached to another, larger piece of legislation to get through Congress.
“As we have noted previously, this legislation will not deliver on the purported objective of improving banking access to underserved communities but instead expand taxpayer subsidies of business lending,” the bankers wrote. “The stated purpose of this legislation is to enable credit unions to serve underserved areas, yet community credit unions and multiple common bond credit unions can already do this under existing law and regulation.”
The letter argues NCUA already allows for multi-state areas to be added to a community credit union’s field of membership, and that HR 7003 “seems to provide the ability for credit unions to expand out- of-market, which contradicts the credit union purpose of serving well-defined local communities and small groups of consumers of modest means.”
The bankers said the legislation also creates a “major new loophole” in the credit union business lending cap, by not allowing business loans made in underserved areas to count against the cap.
Effort to ‘Gut This Limitation’
“Bankers remain staunchly opposed to efforts to gut this limitation, which serves an important public policy objective—focusing this tax-exempt industry on its specified mission of ‘meeting the credit and savings needs of consumers... through an emphasis on consumer rather than business loans’,” the letter continues.
Moreover, the bankers said lack of Community Reinvestment Act requirements on credit unions that have their charters “enhanced through this legislation is also notable.
“If credit unions and banks can compete for the exact same customers, comparable regulatory requirements that provide accountability as to whether the credit union is serving all types of customers are appropriate,” the letter continues. “This is especially the case when those credit unions are receiving a tax subsidy to serve the underserved. Credit unions regularly tout their commitment to low- and moderate-income communities, so they should welcome the opportunity to demonstrate that taxpayer dollars are being spent as intended.”
The New Definition
“When future generations look up the definition of ‘re-hash’ they will find this banker letter,” said John McKechnie III, senior partner in the Washington lobbying firm Total Spectrum.
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