House Dem Credit Union Bill Has Bankers, CUs Fired Up


Read more at the Washington CU Daily

As the House Financial Services Committee prepares to consider legislation that would allow all federal credit unions to add underserved areas to their fields of membership, the war of words between banks and credit unions has ratcheted up once again.

To the American Bankers Association, H.R. 7003, introduced by Financial Services Chairwoman Maxine Waters, D-Calif., represents a major power play by non-tax-paying credit unions to expand their power.

To the National Association of Federally-Insured Credit Unions, credit unions are simply attempting to serve people who do not have easy access to financial services because banks have fled their neighborhoods.

The two groups have sent letters to Financial Services Committee leadership arguing their positions.

American Bankers Association

To the ABA, the legislation is a “backdoor effort by the credit union industry to expand its membership rolls under the guise of financial inclusion,” according to a letter sent by ABA President/CEO Rob Nichols.

Growth-oriented credit unions have failed to demonstrate a commitment to serve the underserved despite a congressional mandate and a federal tax exemption to do so, the trade group said.

In urban areas, according to the ABA, the National Credit Union Administration allows large, multi-state regions, known as “combined statistical areas” to be considered local communities that meet the standard for credit union service. In rural areas, the ABA contended, “geographically enormous” areas can be classified as rural districts. “Thus, community credit unions already have the ability to serve underserved areas if they identify a local need and choose to do so.,” the letter states.

The ABA also renewed their charge that credit unions are leveraging their tax exemption to purchase banks and to move into more affluent areas.

In addition, Nichols wrote, Waters’ bill “would also inject the unrelated and highly controversial issue of the credit union industry’s desire for additional business lending authority into the discussion over how to best serve underbanked communities.” He concluded, ‘In sum, this legislation purports to be about expanding service to at-risk communities, but in reality, it only enables unaccountable out-of-market expansion for credit unions.”

National Association of Federally-Insured Credit Unions

NAFCU Vice President of Legislative Affairs Brad Thaler fired back with his own letter.

“It is unfortunate that some banking groups have come out in opposition to this bill, continuing to attack efforts by credit unions to do more to help the underserved rather than focusing on cleaning up their own track record,” he wrote to committee leaders.

He said that large and community banks have been shutting down branches, with credit unions moving in to provide financial services. He said that during the pandemic, banks closed more than 4,000 branches, according to a study by the National Community Reinvestment Coalition (NCRC).

“Many credit unions want to do more to help underserved areas as banks abandon them and passing legislation to help credit unions fill the void would be a commonsense first step,” Thaler wrote.


  • David Baumann

    David Baumann established and edited the Washington Credit Union Daily website before it was put on hiatus while he served as the editor of the regulatory and legislative blog at CUCollaborate. Before starting Washington Credit Union Daily, David was the Washington correspondent for the Credit Union Times. A veteran Washington reporter, he has spent his career writing and editing for many of the capital’s leading publications, including CongressDaily, National Journal magazine and Congressional Quarterly Weekly. He was part of a team that won a 2005 National Headliner Award for a special issue of National Journal on “The State of Congress.” He holds a B.A. in political science from The George Washington University and an M.A. in journalism from Indiana University.

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