FOM modernization addresses ‘unquestionable need’ in many areas

June 15, 2022

Language modernizing federal credit unions’ field of membership regulations would expand affordable financial services to those who need it, CUNA wrote to House leadership Wednesday. The House is expected to vote on a bill—H.R. 2543—that contains language from the CUNA-League-led Expanding Financial Access for Underserved Communities Act (H.R. 7003).

“We place field of membership reform among our top issues of concern because the current system is unnecessarily cumbersome and restricts credit unions’ ability to improve their members’ financial well-being and advance the communities they serve,” the letter reads. “The archaic field of membership restrictions to which credit unions are subject are antithetical to the goal of financial inclusion and economic equity, and they impede credit unions more fully fulfilling their statutory mission to promote thrift and provide access to credit for provident purposes.”

H.R. 7003 would:

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

It passed the House Financial Services Committee as a standalone bill last month.

CUNA research shows banks closed a net of 7,812 bank branches between January 2005 and March 2021, while credit unions opened a net of 1,439 credit union branches over the same period.