Removing Barriers Blog

Letter sent prior to HFSC Subcommittee hearing on Minority Depository Institutions
Posted October 24, 2019 by CUNA Advocacy

Earlier this week, CUNA wrote to the House Financial Services Subcommittee on Consumer Protection and Financial Institutions for a hearing on minority depository institutions.  Minority depository institution (MDI) credit unions represent an important way in which credit unions are fulfilling their mission by advancing financial inclusion and well-being for minority and underserved communities.

“MDI credit unions play a critical role in advancing financial inclusion and the economic wellbeing of minorities and underserved communities. MDI credit unions form an integral part of the credit union movement and despite field of membership restrictions, the relatively large number of MDI credit unions compared to banks highlights our commitment to financial inclusion and DEI more generally,” the letter reads. “At the same time, we recognize that given the preponderance of small MDI credit unions, they are more vulnerable to consolidation. If consolidation takes the form of merging with other MDIs, allowing them to maintain their focus on a minority population and expand services, then members and their community stand to benefit.”

MDI credit unions represent approximately 10% of all credit unions and serve approximately 3.9 million memberships (representing 3% of all credit union memberships). As of March 30 there were over three times as many MDI credit unions (535) as MDI banks (148), representing 10% of the total number of credit unions compared to 3% of banks."

These MDI credit unions held 3% of loans and 3% of total credit union assets compared to MDI banks, which held 1% of total bank assets. Nearly 80% of MDI credit unions hold the low-income credit union designation.

CUNA notes that MDIs has merged or liquidated at a slightly higher rate than all credit unions, and that small MDI credit unions face several challenges typical of small credit union in general, but face the same regulatory requirements as larger credit unions.

The letter also notes CUNA’s support for NCUA’s MDI Preservation programs, which is believes is “well placed to support MDI credit unions’ resiliency in the face of industry challenges.”