On Wednesday, June 15, the House passed the Expanding Financial Access for Underserved Communities Act which will give federal credit unions the ability to expand their fields of membership to include underserved communities.
Credit union organizations, including the Credit Union National Association (CUNA) strongly supported the bill, stating its importance in bringing affordable financial services to the under- and unbanked. Said Jim Nussle, CUNA President/CEO, “This bill will let credit unions do more of what they do best: promote financial well-being and advance the communities they serve.”
The Act marks the biggest expansion of the Federal Credit Union Act in more than 20 years.
In addition to allowing federal credit unions to expand services to underserved areas, the Act expands 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 will also exempt business loans made in underserved areas from the member business lending cap.
“This legislation provides a commonsense market-based solution to reach the nearly one in five households that are un- or underbanked across the country,” added Nussle. According to CUNA, more than 750 census tracts are financial deserts, and a net 7,800+ bank branches closed between January 2005 and March 2021. Credit unions opened more than 1,400 net credit union branches over the same time period.
The passing comes in spite of the American Banker Association’s protests of the bill, calling it a “backdoor effort by the credit union industry to expand its membership rolls under the guise of financial inclusion.”
The bill was brought up by Chairwoman Maxine Waters (D-CA) of the U.S. House Committee on Financial Services and passed the committee 27-22.