WASHINGTON— A new bill introduced in the House aims to spur the creation of community banks and credit unions, with a focus on expanding Minority Depository Institutions, Community Development Financial Institutions and rural depository institutions.
Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, introduced the American Access to Banking Act (H.R. 4544) Monday.
“The United States banking system has steadily consolidated over the last few decades, with small community banks and credit unions disappearing due to a historically challenging interest rate environment following the 2007-2009 global financial crisis, along with a steady wave of big bank mergers rubber stamped by regulators. In the years following the financial crisis, de novo bank activity plummeted, with an annual average of six new bank charters the past 15 years. This bill seeks to address the void by confronting key concerns from those who are trying to start a new community financial institution,” Waters’ office stated in a release.
“It’s no coincidence that we’re seeing a decline in de novo banks. This longstanding trend stems from several factors over the years, including an overly complex application process, a challenging interest rate environment, and for some, the added burden of discrimination and systemic bias faced by individuals wishing to provide financial access to underserved communities,” Waters said. “As Trump regulators resume rubber stamping massive bank mergers, like the recent Capital One-Discover deal, and begin rolling back oversight for our largest banks and nonbank financial companies, it’s critical that the United States encourages the creation of new community banks and credit unions to compete and serve our communities.”
ACU Responds
"We applaud Congresswoman Maxine Waters for introducing the American Access to Banking Act, which takes meaningful steps to remove unnecessary barriers facing de novo credit unions,” said ACU Chief Advocacy Officer Carrie Hunt. “We are always supportive of legislation that responds to the need for de novo institutions in the midst of an ever-evolving financial landscape.
“Additionally, we want to ensure that current credit unions already serving more than 144 million people have the resources they need to survive and thrive today—whether that's by lowering the cost of doing business, fighting fraud, reducing regulatory burdens, or addressing the challenges both existing and new credit unions face,” continued Hunt. “We look forward to working with Ranking Member Waters to support the viability of new credit unions, while also remaining laser focused on strengthening the backbone of the financial services system: the thousands of community-based institutions making a difference across the country."
Read ACU's letter to Waters here.
DCUC Letter
Defense Credit Union Council Chief Advocacy Officer Jason Stverak told CUToday.info that H.R. 4544 is a long-overdue step toward reversing the decline in new credit union formation.
“By streamlining the chartering process, improving regulatory support, and helping underserved communities gain access to safe, affordable financial services, this legislation gives credit unions the tools to grow where they’re needed most,” said Stverak, who Monday sent a letter to Waters on the legislation. “We applaud Ranking Member Waters for championing this effort and ensuring credit unions are at the center of this access-focused bill."
In the letter Stverak stressed the need for H.R. 4544 is clear.
"In recent years, the creation of new credit unions has nearly ground to a halt. This alarming decline in de novo credit unions threatens to reduce consumer choice and leave many communities (including defense communities) without the locally attuned financial services that credit unions provide. We believe H.R. 4544 directly addresses this problem by removing barriers and fostering a regulatory environment that makes it easier to start new credit unions," he wrote.