While credit unions agree with the spirit of a proposed to provide monthly stimulus payments to be distributed to direct deposit to a new, Fed-backed account, CUNA believes Americans would best be served by leveraging the system currently in place.

Rep. Maxine Waters (D-Calif.), chairwoman of the House Financial Services Committee, has proposed monthly stimulus payments that would go to “FedAccounts,” and other similar past proposals have included utilizing the post office for similar deposit accounts.

“There is no need to pass legislation requiring the Federal Reserve or the United State Postal Service to provide products and services that the organizations were not designed to provide. Instead, Congress should be using its public platform to encourage all consumers, especially the most vulnerable among us, to seek out financial services from a community-based, not-for-profit credit union,” the letter reads. “As the nation’s original consumer protectors, credit unions have a long history of providing affordable, responsible access to banking services.”

In fact, the letter notes that membership in a credit union provides consumer protections and access not available through a FedAccount:

• Affordable Products and Services: Credit unions provide best in the business products and services at lower rates than their bank counterparts. For example, as of December 2018, credit unions’ average interest rate for classic credit cards stood at 11.61% compared to banks’ average interest rate of 13.47%;
• Usury Cap: The Federal Credit Union Act and NCUA Board has set a usury cap of 18% for most financial products, including credit cards; and
• Broad Access for Consumers: The Shared Branching Network and other arrangements have established a wide-ranging, surcharge-free ATM network that allows a credit union’s members to use branches of other credit unions. This cooperative network ensures members have access their money almost anywhere.

“We agree that consumers should have access to financial services, but we think that credit unions are the best organization to deliver financial services. That is why CUNA has advocated for solutions to help consumers access credit unions, including reduced regulatory burden, increased authority for credit unions to expand product offerings, and increased ability to expand fields of membership into areas in need of high-quality financial services,” the letter reads. “If the door to a credit union was open a bit wider, then the underserved and unbanked would be a lot better off.