Community Bankers Ask Congress to Block FOM Expansion

The ICBA has written to congress regarding legislation that would allow any credit union to add underserved areas to its field of membership. Learn why.

David Baumann


Nov 25



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David Baumann

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David Baumann

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ICBA seeks to head off legislation that would allow any credit union to add underserved areas to its field of membership.

Community bankers are asking congressional leaders to ensure that in the lame duck session set to resume next week Congress does not pass legislation that would allow all credit unions to add underserved areas to their fields of membership.

“This controversial bill has no bipartisan support and should not be considered during the Lame Duck session,” Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America (ICBA), wrote in a letter to House and Senate leaders.

That bill, HR 7003, has been approved by the House Financial Services Committee, with all Republicans on the panel voting against it.

The legislation would further exempt business loans made by credit unions in underserved areas from the credit union member business lending cap. In addition, it would expand the definition of an underserved area to include New Markets Tax Credit areas and any area that is more than ten miles from the nearest financial institution branch.

The bill has not been considered by the full House or by the Senate, so chances of its passage are slim, at best. And with Republicans controlling the House next year, the legislation is virtually certain to be ignored if reintroduced.

However, the ICBA is not taking any chances.

Romero Rainey told congressional leaders that the bill “would expand taxpayer-subsidized credit unions’ fields of membership and commercial lending powers to include low-income and underserved areas, without subjecting credit unions to proper documentation or oversight to determine if low-income people are served.”

Response from Credit Union Groups

As might be expected, credit union trade groups have a different view of the bill.

“Many credit unions want to do more to help underserved areas as banks abandon them and passing legislation to help credit unions fill the void would be a commonsense first step,” Brad Thaler, NAFCU’s vice president of legislative affairs, wrote when the Financial Services Committee was preparing to consider the bill.

CUNA likewise supports the measure.

“This legislation provides a commonsense market-based solution to reach the nearly one in five households that are un- or underbanked across the country,” CUNA President and CEO Jim Nussle said, shortly after the Financial Services Committee approved the bill.

Where Banks and Credit Unions Agree

Aside from the contentious credit union bill, the list of legislation that the ICBA is urging Congress to enact or block during the lame duck session is remarkably similar to the priorities of the credit union trade groups.

For instance, the community bankers and credit union groups are asking congressional leaders to pass legislation that would provide both credit unions and banks with a regulatory safe harbor if they provide financial services to marijuana-related businesses in states where cannabis is legal.

“As these businesses are effectively shut out of the banking industry, they are forced to operate in cash and create a target for armed robbery and assault,” Romero Rainey wrote.

She noted that the House has passed the measure seven times, but the Senate never has acted on it. This year, the marijuana banking provisions also are tucked into the House-passed version of the annual defense authorization bill. The Senate has not yet considered its defense bill, so it is unclear whether it will survive.

However, Senate Democrats have indicated that they are working on marijuana legislation that could include the banking provisions.

The ICBA also said they oppose legislation dealing with credit card interchange issues, any expansion of banking services the post office is permitted to provide, and a measure that would govern the types of overdraft protection that banks and credit unions may provide.

Credit union trade groups oppose those measures as well.

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