Legislation will enable CUs to serve ‘underserved, abandoned’ communities

The Expanding Financial Access to Underserved Communities Act (H.R. 7003) will enable credit unions to help communities in need, many of which banks have abandoned or shown little interest in serving. CUNA, the American Association of Credit Union Leagues (AACUL), and all Leagues wrote in support of H.R. 7003 in advance of the bill’s scheduled markup by the House Financial Services Committee.

“Any serious discussion of policy remedies to address access to financial services to underserved or unbanked persons, businesses, or communities must include modernizing laws and regulations which prevent credit unions from serving those the banks have left behind,” the letter reads. “Credit unions’ field of membership restrictions, and the member business lending cap, shut out those that need access to mainstream financial services.

“This legislation is not a panacea to these exclusionary policies, but it does represent a solid free-market step forward toward financial inclusion and serving those who have been unable to access our nation’s financial institutions,” it adds.

Specifically, the legislation would

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

“These changes will enable and encourage credit unions to serve underserved and abandoned communities and promote financial inclusion, all at no cost to the taxpayer,” CUNA, AACUL, and the Leagues wrote.

The letter also notes that banks have closed 7,812 net branches between January 2005 and March 2021, while credit union opened a net 1,439 branches during the same period.