Expanding FOM Would Leverage Success of CU Model

SOURCE: CUNA News

Credit unions are eager to support underserved communities, but archaic field-of-membership restrictions prevent them from expanding more broadly to those most in need. CUNA wrote to the Select Committee on Economic Disparity and Fairness in Growth Thursday in support of the Expanding Financial Access for Underserved Communities Act.

“The Expanding Financial Access for Underserved Communities Act would address the epidemic of the unbanked and underbanked in the United States by making it easier for consumers in areas without sufficient financial services providers to access credit unions,” the letter reads. “We strongly support this legislation, which would make three changes to the Federal Credit Union Act to enable and encourage credit unions to serve underserved and abandoned communities and promote financial inclusion to all at no cost to the taxpayer.

The bill would:

• Allow all federal credit unions to add underserved areas to their fields-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.

“Rather than create a new government program or increase federal spending, reforming archaic field-of-membership restrictions through the Expanding Financial Access for Underserved Communities Act is a market-based solution leveraging the success of the credit union model,” the letter reads. “This legislation breaks down barriers that keep credit unions from being part of the solution to address financial access for underserved and unbanked communities.”