FOM reform would leverage success of credit union model

July 22, 2021

The CUNA-supported Expanding Financial Access for Underserved Communities Act would address the epidemic of the unbanked and underbanked in areas without sufficient financial services providers by improving access to credit unions. CUNA submitted a letter for the record Wednesday for a House Financial Subcommittee hearing discussing the legislation.

“Rather than create a new government program or increase federal spending, reforming archaic field of membership restrictions through the Expanding Financial Access for Underserved Communities Act is a market-based solution leveraging the success of the credit union model,” the letter reads. “This legislation breaks down barriers that keep credit unions from being part of the solution to address financial access for underserved and unbanked communities.”

Specifically, the bill would:

  • Allow all Federal credit unions to add underserved areas to their field of membership.
  • Exempt business loans made by credit unions to businesses in underserved areas from the credit union member business lending cap.
  • Expands the definition of an underserved area to include any area that is more than 10 miles from the nearest branch of a financial institution.

Several credit union Leagues also wrote to the subcommittee in support of the bill, including the Ohio Credit Union League, League of Southeastern Credit Union, the California Credit Union League and Nevada Credit Union League.

CUNA also supported the Promoting New and Diverse Depository Institutions Act, which would require NCUA and other prudential regulators to conduct a study to assess the challenges by prospective de novo financial institutions and create a plan to increase de novo financial institutions in a way that promotes safety and soundness.