Credit unions recognize that financial inclusion and access to capital are critical to ensuring the survival of many of our nation’s most vulnerable small businesses, especially women- and minority-owned businesses (MWBEs), CUNA wrote to the House Financial Services Subcommittee on diversity and inclusion Wednesday. The subcommittee conducted a hearing Thursday on challenges facing MWBEs accessing capital and financial services during the pandemic.
“During economic and financial crises, credit unions have stood out with their focus on mission and we have continued lending to help members navigate through tough times while banks were more concerned with preserving capital, Indeed, credit unions are more likely than other lenders to continue to lend during recessions.”
Credit unions are also unique in the financial services industry because they lead the way when it comes to gender diversity with 52% of credit union CEOs being women compared to 5% of bank CEOs. In addition, despite field of membership restrictions and no Community Reinvestment Act (CRA) requirements, credit unions advance financial inclusion and access by locating roughly 70% of credit union branches in racially/ethnically diverse areas compared to roughly 60% of bank branches.
“The way that credit unions execute their mission puts them in a good position to address inequity in the financial services sector affecting MWBEs. In their own way and based on the needs of their membership, all credit unions work toward this. However, given the vulnerabilities of MWBEs, Minority Depository Institution (MDI) and Community Development Financial Institution (CDFI) credit unions are often on the front lines of this critical work.”
As of May 14, 2020, 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. In addition, as of December 31, 2019, there were 521 MDI credit unions (over three and a half times the number of MDI banks), representing 10% of all credit unions and serving 4 million memberships. Both MDI and CDFI credit unions form an integral part of the credit union movement and enhance our ability to serve MWBEs and other underserved groups during this crisis.
CUNA also offered two suggestions for how Congress can use credit unions to make a bigger difference for MWBEs and their communities: