Plans to extend credit union authority criticized by ABA

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The American Bankers Association (ABA) has criticized a recent bill to expand membership in Credit Unions.

The bill, The Expanding Financial Access for Underserved Communities Act, provides for three changes to the Federal Credit Union to allow and encourage credit unions to serve underserved and abandoned communities and promote financial inclusion for all without costs for the taxpayer.

However, in a letter to the House Financial Services Committee published on August 23, the ABA expressed its opposition to the bill, saying that credit unions already have enough opportunities to provide services to low-income communities, but chose not to intervene and to do so. .

Instead, the bill is seen as yet another backhanded effort by the credit union industry to increase membership at the expense of banks that pay taxes through the association.

The ABA backed up its criticism with data indicating a tendency for credit unions to open branches in high- and middle-income census tracts and to close branches in low- and middle-income census tracts.

Additionally, the letter challenges the credit unions’ process of seeking additional authorization without providing Community Reinvestment Act (CRA) -type measures that demonstrate service to communities at risk.

The ABA’s public disapproval of this bill follows a long history of opposition to the credit union. Recently, the association criticized the growing trend of credit unions to buy from community banks, calling on Congress to intervene and condemned the move that allowed credit unions to issue subordinated debt to help the NCUA stay in business. regulatory capital perimeters.

Growing dissatisfaction, caused by new and earlier opposition to regulation, prompted calls from the American Bankers Association for CRA-like regulatory requirements for credit unions and for Congress to take action. to block acquisitions of taxable banks by tax-exempt institutions. In addition to continuing to contribute to the beliefs that credit unions do not provide adequate assistance or do not contribute enough to communities.

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