America’s economic recovery from the pandemic has brought renewed attention to the financial burdens imposed on historically marginalized and underserved communities. Policymakers have a strong imperative to end systemic practices that limit access to financial services and increase financial deserts across our country.
We’ve seen that commitment translated into legislative action through the new House Financial Services Subcommittee on Diversity and Inclusion, led by Chair Joyce Beatty (D-Ohio) and Ranking Member Ann Wagner (R -Mo.).
They want to hold big banks accountable for discriminatory lending practices, rule over payday lenders, expand homeownership, and help families of all backgrounds achieve financial well-being. Addressing the inequalities in our society through financial inclusion is central to the credit union‘s mission and central to CUNA’s advocacy program.
CUNA works tirelessly to ensure that policy makers know that as not-for-profit, member-owned financial cooperatives, credit unions are focused on promoting financial inclusion and equity in communities we serve. CUNA has proudly supported efforts to increase funding for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), to remove barriers for the LGBTQ+ community, and to ensure women and businesses owned minorities have access to capital without being pressured by regulatory bureaucracy. .
Additionally, CUNA called on Congress to modernize the Federal Credit Union Act so that credit unions can remain the best financial option for consumers. One of the most important things Congress could do to promote financial inclusion is to allow all federal credit unions to serve underserved areas. CUNA is working closely with House Financial Services Committee Chair Maxine Waters (D-California) to introduce the Expanding Financial Access for Underserved Communities Act. The bill would allow federal credit unions to add underserved areas to their membership and exempt business loans in low-income areas from the arbitrary cap on loans to member businesses.
Additionally, the legislation expands the definition of a low-income credit union to include any area more than 10 miles from the nearest branch of a financial institution. The outdated domain of credit union membership restrictions and corporate member lending caps exclude those most in need of access to traditional financial services.
At this pivotal time, when our nation must face the reality that the pandemic has disproportionately impacted underserved communities and communities of color, CUNA strongly believes that this legislation makes significant progress in addressing financial inclusion for all Americans.
As we look beyond the pandemic, we know that access to capital will be critical to ensuring the survival of many of our nation’s most vulnerable small businesses, especially women and minority-owned businesses. We also know that loans to credit unions are more inclusive; research from the Small Business Administration (SBA) has shown that about 80% of business loans from credit unions are loans that banks would not make.
Credit unions are stepping up to meet the financial needs of Americans. Because we belong to the members we serve every day, credit unions have a vested interest in moving our communities forward. That’s why credit unions work so hard to improve their members’ savings, help them invest in their home or business, and be there when needed. To that end, it is important that the credit union movement continues to stand up for our members and our not-for-profit mission and structure that allows us to provide affordable financial services to everyone.
It’s at the heart of what credit unions do – people helping people – no matter where they come from.
Abigail Truhart is Director of Advocacy at CUNA in Washington, D.C.