Allowing FCUs to serve underserved areas would advance financial inclusion
Congress can promote financial inclusion and help small businesses by ensuring federal law permits all federal credit unions to serve underserved areas, CUNA wrote to the Senate Banking, Housing, and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection. The subcommittee conducted a hearing on the role Community Development Financial Institutions and Minority Depository Institutions.
“CUNA strongly supports the Expanding Financial Access for Underserved Communities Act, which would allow all federal credit unions to add underserved areas to their field of membership and exempt business loans made by credit unions in low-income areas from the credit union member business lending cap,” the letter reads. “Furthermore, the legislation expands the definition of a low-income credit union to include any area that is more than 10 miles from the nearest branch of a financial institution.
“This legislation takes a significant step forward in addressing financial inclusion for small businesses as well as all Americans,” it adds.
The letter also notes CUNA support of the Community Development Institutions Fund and the 433 CDFI-certified credit unions in the U.S.
“The CDFI Fund uses small amounts of federal dollars to leverage significant amounts of private and non-federal dollars and has added a tremendous boost to the CDFI industry (which relies heavily upon private sector funds from corporations, individuals, religious institutions, and private foundations),” the letter reads. Community Development Credit Unions (CDCUs) grow local economies and serve the most economically distressed communities in the nation. Support for these institutions, as well as providing full funding for the CDFI Fund, are good investments by the federal government.”
CUNA adds that Minority Depository Institutions “form an integral part of the credit union movement and enhance our ability to serve underserved groups.”
There were 519 MDI credit unions (over three and a half times the number of MDI banks), representing 10 percent of all credit unions and serving 4.6 million members as of Sept. 30, 2021, a growth of 700,000 members in the past three years.