NCUA report finds CUs serve those Congress intended
WASHINGTON (11/16/06)--A report issued yesterday on credit union service to members, including those of "modest means," verifies credit unions are serving exactly who the Congress has intended: Middle income, working Americans seeking to improve their lives, but who live largely from paycheck to paycheck, according to the Credit Union National Association (CUNA).
The National Credit Union Administration (NCUA) today released the results of its "Member Service Assessment Pilot" which surveyed 448 federal credit unions nationwide, seeking information on how credit unions served their members, including those of modest means. The study was in response to issues raised by the Government Accountability Office, as well as questions posed by the House Ways and Means Committee in November 2005.
The NCUA said the collected data reflect:
- 60% of the membership in the average federal credit union has a median family income of less than $60,000 annually;
- 82% has less than $75,000; and
- 96% has a median family income of less than $100,000.
CUNA President/CEO Dan Mica said the congressional record is full of references making it clear Congress has intended credit unions to have a special mission of serving the broad working class of America--and had no intention of limiting credit union service to only the poorest.
"This report shows that is precisely what credit unions are doing today: Serving people who work for their livings, often from paycheck to paycheck, just like so many middle income families." He noted that, according to the American Payroll Association, 65% of Americans are dependent on their next paycheck to meet current living expenses.
The results of the project, Mica added, only show how credit unions serve their current memberships, since all credit unions are restricted to serving their "fields of membership."
"There are more than 40 provisions in federal law which address, define and/or limit who credit unions may serve and the process those credit unions must follow to make changes in their membership eligibility," Mica said. "Further, from the turn of the last century until recently, traditional membership restrictions have obliged credit unions to organize memberships primarily around occupations, in which eligibility for membership was restricted to those who worked for an employer or group of employers, or family members of those so eligible.
"The results of NCUA's survey reinforce the fact that credit unions are doing what Congress has always intended: That credit unions should serve working Americans," he said.
Mica added that if Congress would remove barriers to all credit unions extending such services, credit unions could be doing even more to serve modest means members.
"Right now, because of lawsuits brought by the banking industry in 2005 and settled in 2006, only credit unions that serve multiple groups can add underserved areas. Single occupational groups and community credit unions--more than half of all federal credit unions--may no longer extend services to underserved areas."
He pointed to results in the NCUA survey that show community credit unions tend to serve more of the underserved with the passage of time and that 20% of federal credit unions now have community charters. However, only 9% of the credit unions that have converted to community charters have had those charters for more than five years.
"All credit unions should be able to add underserved areas to their fields of membership," Mica said.
Finally, the credit union leader noted that the banking industry has been behind much of the rhetoric swirling over who credit unions can or should serve, while at the same time erecting barriers to credit union service.
"The banking industry has seemed fixated on invalidating credit unions," said Mica. "Yet, bankers have also taken action in the courts and on Capitol Hill to block credit unions in their efforts to serve more modest-means Americans. These efforts stand in stark contrast to bankers' own complaints that credit unions are not doing enough."
Use the resource link below to learn more about credit unions' response and to access NCUA's modest means report.
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