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Today, we sent a letter to the
Senate Committee on Homeland Security and Government Affairs, before its hearing
on the future of the US Postal Service (USPS). We have an interest in the Postal
Service due to a 2014 Office of Inspector General (OIG) white paper entitled,
“Providing Non-Bank Financial Services for the Underserved,” which suggested
that the postal service is well positioned to provide certain financial
services to Americans who are underserved or unserved by the mainstream
financial services sector.
We agree that more could be
done to ensure that the nearly 70 million Americans that are presently
underserved or unserved, but we are skeptical that the USPS is the right way to
reach them. Instead, our letter urged Congress
to ensure that current laws and regulations are not hindering consumer access
to credit unions.
We stressed to the committee
that the regulatory burden facing credit unions in the aftermath of the financial
crisis has been severe, with more than 200 regulatory changes since 2008. That’s why we have been encouraging Congress
and the regulators to look for ways to reduce credit union regulatory burden to
free up resources to provide additional services to members.
Our letter also expressed
support for NCUA’s recently proposed field of membership regulation that should
make it easier for credit unions to add communities and other groups to
existing fields of membership, resulting in increased availability of credit
union services to underserved consumers. However, we also encouraged Congress
to look more broadly at credit union field of membership restrictions. Importantly,
our letter explained that about 1/3rd of credit unions are community chartered
or designated low-income, which that means many of them can already serve a broad variety of the
public, including those who are currently under-banked.
When credit unions were first
established in the US, they used field of membership limits as a
credit worthiness tool so that credit unions would lend to members they knew.
Today there are many other ways to determine a borrower’s credit worthiness. It
is a very legitimate question to ask whether those restrictions on credit
unions make sense in the 21st century financial services environment. Congress
has allowed some credit unions to add underserved areas to their fields of
membership - and many have. But the law is arcane and the implementing rules
complicated. Congress should grant any federal credit union the power to add an
underserved area to its field of membership.
So we strongly encouraged
Congress to explore how the Federal Credit Union Act and other banking laws
constrain credit unions’ ability to do more to serve the underserved. We hope
that Congress can work to expand consumer access to mainstream financial
services through institutions established for that purpose, before making
changes to the Postal Service.
Champion for the Credit Union Movement
Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
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