Credit unions are well-purposed and well-positioned to address inequity in the financial services sector, CUNA wrote to the House Financial Services subcommittee on consumer protection and financial institutions Wednesday. The subcommittee conducted a hearing Wednesday on inclusive lending during the pandemic from Community Development Financial Institutions and Minority Depository Institutions.

“From the outset of the crisis, credit unions have worked to ensure that their members, employees and volunteers remain safe and healthy, and that they continue to be able to provide access to financial services to their members. During this time, the credit union commitment to advancing diversity, equity, and inclusion (DEI) has not wavered. In fact, the COVID-19 pandemic reinforces the urgency of addressing financial well-being by ensuring access to financial services are inclusive and financial solutions are equitable

As of May 14, there are 324 CDFI credit unions (more than two times the number of CDFI banks), representing nearly 30% of all CDFIs and serving nearly 12 million members, CUNA notes. In addition, roughly 70% of credit union branches are in racially/ethnically diverse areas compared to roughly 60% of bank branches.

MDI credit unions represent approximately 10% of all credit unions and serve approximately four million memberships (representing 3% of all credit union memberships). As of Dec. 31, 2019, there were over three and a half times as many MDI credit unions (521) as MDI banks (144).

“Both MDI and CDFI credit unions form an integral part of the credit union movement and enhance our ability to so serve underserved communities during this crisis,” the letter reads. At the same time, we recognize that both MDIs and CDFIs face challenges in accessing badly needed funding. CUNA supports efforts to direct additional funding to both. In addition, MDIs are more vulnerable due to their smaller size, so we support efforts to bolster their resilience and improve access to CARES Act programs like the Paycheck Protection Program and the Main Street Lending Facility.”

CUNA also offered three suggestions for how Congress can use credit unions to make a bigger difference for low-income and minority members and communities:

• Ensure the problems borrowers and lenders experienced during the lending phase of the SBA’s Paycheck Protection Program (PPP) do not occur during the forgiveness phase;
• Ensure that all available small business credit is deployable during the recovery; and
• Facilitate the addition of underserved areas to credit unions’ fields of membership.