Removing Barriers Blog

Letter sent prior to Senate Banking hearing on digitization of money and payments
Posted June 30, 2020 by CUNA Advocacy

CUNA wrote to Chairman Crapo (R-ID) and Ranking Member Brown (D-OH) prior to the Senate Banking Committee hearing about the digitization of money and payments.  

We appreciate the hearing’s focus on the digitization of money and payments as credit union are poised to leverage technology to deliver innovative financial services to members.

Recently the House of Representatives introduced H.R. 6321, “the Financial Protections and Assistance for America's Consumers, States, Businesses, and Vulnerable Populations Act,” to address numerous issues arising from the pandemic. The bill includes a provision to provide monthly stimulus payments and allows for these payments to be distributed by direct deposit or to a new, basic bank account backed by the Federal Reserve, called “FedAccounts.” Senator Brown has also introduced S. 3571, “the Banking for All Act,” which would create similar methods of payment. The creation of FedAccounts is similar to past proposals that would create deposit accounts at post offices allowing them to be used as banks.

While credit unions agree with the spirit of those proposals to create FedAccounts, we think that Americans would best be served by leveraging the banking system already in place. There is no need to pass legislation requiring the Federal Reserve or the United State Postal Service to provide products and services that the organizations were not designed to provide. Instead, Congress should be using its public platform to encourage all consumers, especially the most vulnerable among us, to seek out financial services from a community-based, not-for-profit credit union. As the nation’s original consumer financial protectors, credit unions have a long history of providing affordable, responsible access to banking services. 

In fact, membership in a credit union provides a consumer with protections and access not available through a FedAccount:

Affordable Products and Services: Credit unions provide best in the business products and services at lower rates than their bank counterparts. For example, as of December 2018, credit unions’ average interest rate for classic credit cards stood at 11.61 percent compared to banks’ average interest rate of 13.47 percent.

Usury Cap: The Federal Credit Union (FCU) Act and National Credit Union Administration (NCUA) Board has set a usury cap of 18 percent for most financial products, including credit cards.

Broad Access for Consumers: The Shared Branching Network and other arrangements have established a wide-ranging, surcharge-free ATM network that allows a credit union’s members to use branches of other credit unions. This cooperative network ensures members have access their money almost anywhere. 

During the hearing, the Committee heard from:

  • The Honorable J. Christopher Giancarlo, Senior Counsel, Willkie Farr and Gallagher LLP and former Chairman, U.S. Commodity Futures Trading Commission
  • Charles Cascarilla, Chief Executive Officer and Co-Founder, Paxos
  • Professor Nakita Q. Cuttino, Visiting Assistant Professor of Law, Duke University School of Law