House Passes Bill to Review Barriers to Credit Union, Bank Formation
Credit union board meeting legislation also approved, a measure supported by both CUNA and NAFCU.
The House on Tuesday passed legislation that would require banking agencies, including the National Credit Union Administration, to investigate the challenges facing groups that want to start a credit union or bank.
The bill also would require the banking agencies to develop a strategic plan to promote the chartering of Minority Depository Institutions (MDIs) that could be certified as Community Development Financial Institutions (CDFIs).
“Since the 1980s, we have seen steady consolidation in the number of U.S. depository institutions from having roughly 33,000 banks and credit unions in 1980 to less than 10,000 today,” House Financial Services Committee Chairwoman Rep. Maxine Waters, D-Calif., said on the House floor.
She added she is concerned that very few depository institutions, particularly MDIs, have been chartered, while the number of banking deserts has grown.
Rep. French Hill, R-Ark., said the legislation would require the agencies to present Congress with recommendations, adding that the bill is a “first step toward identifying and addressing the challenges posed to the chartering of new banks and credit unions.”
The bill’s primary sponsor, Rep. Jake Auchincloss, D-Mass., said that MDIs and CDFIs play a unique role in the financial system.
“By investing in and supporting MDIs and CDFIs, Congress can foster economic opportunities for people who otherwise are unable to access affordable banking services in a system that is already restricted and restrictive,” he stated.
Credit Union Board Meeting Legislation Approved
Meanwhile, the House Financial Services Committee worked through its own long list of bills. Votes on many of those measures are scheduled to take place on Thursday.
The committee did approve, by voice vote, H.R. 6889, legislation that would allow the boards of well-managed credit unions to meet six times a year, rather than monthly. Newly formed credit unions would be required to meet monthly for the first five years.
Response From Credit Union Groups
Credit union trade groups strongly supported that legislation.
“This bill addresses an outdated Federal Credit Union Act requirement and will free up credit union staff and board members to focus more on member service,” Jim Nussle, president/CEO of the Credit Union National Association said, following committee approval of the bill.
Prior to the vote, Brad Thaler, vice president of legislative affairs at the National Association of Federally-Insured Credit Unions, wrote to the committee in support of the legislation.
He added the bill is a welcome modernization that will give credit unions more flexibility and free up resources.
“This is particularly true for small credit unions in rural and underserved areas,” Thaler wrote. “With all of the connectivity and technology available today, credit union boards are able to communicate in an ongoing manner that has negated the necessity of monthly meetings.”