FOM expansion is ‘solid, free-market step’ to meeting financial needs

Credit unions would like to build on draft legislation discussed by a House Financial Services subcommittee to solve the many problems causing banking deserts, CUNA wrote Tuesday. CUNA sent its letter for the record of a House Financial Services Subcommittee on Financial Institutions and Monetary Policy hearing on banking in the 21^st century.

“Any discussion of policy remedies to revamp and revitalize access to financial services to underserved communities should include modernizing laws and regulations which prevent credit unions from serving those the banks have left behind,” the letter reads. “To more fully solve the size and scope of this problem, the committee should consider allowing credit unions to expand their field of membership to underserved communities. Field of membership expansion will support a diverse ecosystem of financial options for the consumer.”

The draft bill under discussion fails to note increasing bank branch closures, especially in underserved areas, CUNA notes. CUNA research shows banks closed 10,651 net bank branches between January 2005 and September 2022, while credit unions opened a net 1,745 branches over that same time period.

“The decrease in bank branches demonstrates bankers’ profit-over-people approach to financial services. The increase in credit union branches demonstrates that credit unions are not only committed to providing services to communities but are also committed to being physically present in those communities,” the letter reads.

“Field of membership expansion 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.