‘Archaic’ Restrictions Prevent CUs from Empowering Rural Communities

Credit unions are eager to be a rural community lending partner, but archaic charter and field of membership restrictions prevent most from helping those communities, CUNA wrote to the House Agriculture Committee Thursday. Rural credit unions serve 9.7 million members – over one-fifth of the nation’s rural population.   

“One of the most important things that Congress could do is empower rural communities through financial inclusion. That means ensuring that federal law permits all federal credit unions to serve rural communities, banking deserts, and all underserved areas,” the letter reads.

“Given the unprecedented economic disruption caused by COVID-19, it is important now more than ever that rural communities have access to a trusted, local financial partner. Credit unions are eager to be that partner, but archaic charter and field of membership restrictions prevent most from expanding more broadly to help those who are most in need,” it adds.

The CUNA-backed Expanding Financial Access for Underserved Communities Act would address the epidemic of unbanked and underbanked, the letter notes. CUNA conservatively estimates that this legislation would bring benefits for over one million consumers who “now have no realistic, affordable options in the financial marketplace.”

The bill would:

• Allow all federal credit unions to add underserved areas to their field of membership.
• Exempt business loans made by credit unions to businesses in underserved areas from the credit union member business lending cap.
• Expands the definition of an underserved area to include any area that is more than 10 miles from the nearest branch of a financial institution.