Credit Unions Barely Mentioned at House Bank Revitalization Hearing

A field of membership bill went ignored at the hearing while a witness representing a banking group called on Congress to examine the CU tax exemption.

David Baumann


Feb 9



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David Baumann

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FOM bill ignored as witness representing banking group calls on Congress to examine credit union tax exemption.

As a House subcommittee explored ways to revitalize the banking industry, credit unions barely were mentioned.

Congress should be encouraging a regulatory environment that allows community financial institutions to thrive and survive, said Rep. Andy Barr, R-Ky., chairman of the House Financial Institutions and Monetary Policy Subcommittee, as he opened the hearing.

Among other issues, the subcommittee and witnesses testifying examined five bills ranging from ways to encourage the opening of new banks to proposals that would regulate financial technology companies.

Field of Membership Bill Goes Unmentioned

Notably absent from the discussion was a proposal the House Financial Services Committee approved during the last Congress, when the panel was under Democratic control. That bill would have allowed all credit unions to expand their fields of membership to underserved areas.

The legislation was approved with all Democrats voting in favor and all Republicans in opposition. At the time, Barr said that he was concerned the legislation could establish an unlevel playing field.

Banking Witness Calls for Review of CU Tax Subsidy

The hearing Wednesday did not feature a credit union witness but did feature a banker representing the American Bankers Association. Jim Reuter, CEO/President of FirstBank in Denver, did not discuss credit unions in his oral statement.

However, in written testimony, Reuter called on Congress to examine whether credit unions are fulfilling their statutory requirement to serve low-to-moderate income communities in ways that justify their income tax exemption. He also called on Congress to subject credit unions to the Community Reinvestment Act.

“A new factor driving the decrease in the number of banks is the continuing credit union tax subsidy which credit unions are increasingly using to acquire tax-paying banks in unprecedented numbers,” he said.

Response From CU Trade Groups

While no credit union witness testified, trade groups did weigh in on issues being addressed by the subcommittee.

“Any discussion of policy remedies to revamp and revitalize access to financial services to underserved communities should include modernizing laws and regulations which prevent credit unions from serving those the banks have left behind,” CUNA President/CEO Jim Nussle wrote, in a letter to the panel.

He added that Congress should consider the legislation allowing all credit unions to expand their fields of membership into underserved areas.

“Field of membership expansion will support a diverse ecosystem of financial options for the consumer,” he said.

In his own letter to the subcommittee, Brad Thaler, NAFCU’s vice president of legislative affairs, also called for legislation allowing credit unions to expand their fields of membership.

He added that the subcommittee should examine the CFPB’s apparent refusal to provide regulatory exemptions for smaller financial services providers. In addition, Thaler called on Congress to allow the NCUA to adopt a floating interest rate on loans and to provide credit unions with more investment opportunities.

The letter also said Congress should increase the credit union Member Business Lending cap, which generally limits such lending to 12.25% of deposits.

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