Rules Committee Will Allow Debate on Amendment to Kill FOM Plan
Rules committee will allow amendment to kill FOM plan to go to house floor. The legislation also seeks to end long-standing economic inequities.
The legislation also seeks to end long-standing economic inequities.
When financial services legislation reaches the House floor, Republicans will have an opportunity to kill a plan to allow all federal credit unions to expand their fields of membership to underserved areas, the House Rules Committee decided Monday.
The Rules Committee approved a rule governing debate on the bill, H.R. 2543, which includes a variety of provisions, including the credit union field of membership expansion.
The rule will go to the House floor and if approved, the bill would then be considered.
That bill was scheduled to go to the House floor this week, however Financial Services Chairwoman Maxine Waters, D-Calif., the sponsor of the measure announced Tuesday that she has tested positive for COVID. The Financial Services Committee abruptly postponed a markup that had been scheduled for Tuesday. It remained unclear whether Waters’ quarantine might force a postponement of floor consideration of her bill.
The credit union provision in question would expand the ability of all federal credit unions to serve underserved areas, that is, census tracts in which 85% of the area qualifies as low-income or areas that are more than ten miles from the nearest branch of a depository institution. The bill also would exempt business lending in those areas from the credit union member business lending cap.
Republicans want to provide financial services to underserved areas, but “we can’t do it in the wrong way,” Rep. Andy Barr, R-Ky., said in asking the committee to allow the amendment to delete the FOM expansion.
Barr said that while credit unions are “uniquely qualified” to serve underserved areas, he fears that the FOM expansion plan would be unfair to other financial services providers and would inhibit competition.
He said the FOM plan would open the door to large national credit unions to expand their footprints and that the proposal “totally obliterates” the common bond requirement for credit unions.
Banking trade groups have been lobbying hard for the FOM expansion to be deleted from the legislation, while credit union trade groups have been pushing for the proposal. The American Bankers Association and state banking associations have sent House members a letter outlining their opposition.
The National Association of Federally-Insured Credit Unions has fired back.
“It is the height of cynicism that the banking trade associations signing the letter are essentially saying that even though their members have left these communities, they do not want credit unions to step in to fill the void as banks pull out,” Greg Mesack, NAFCU’s senior vice president of government affairs, wrote in a letter to the Rules Committee.
He said that as banks have shut down branches, credit unions have filled the void. He added that the business lending cap serves as a disincentive for many credit unions when they consider small business programs.
Democrats and Republicans were sharply divided on the overall bill, as they testified before the Rules Committee Monday.
“Every day a new banking desert is created,” Waters told the Rules Committee. Waters said that her bill will address long-term inequities and help financial institutions reach underserved areas.
Rep. Ann Wagner, R-Mo., told the Rules panel that while Republicans support the goals of the bill, “Unfortunately, H.R 2543 misses the mark.” She said the legislation is loaded with “partisan poison pills.”
“We all know this bill, as written, will never become law,” she added. “It is dead on arrival”
However, the Biden Administration has endorsed the bill.
“The Administration strongly supports efforts to promote equity for underserved communities and increase access to safe and affordable financial services, wealth, and economic opportunity for all Americans,” the administration said, in a “Statement of Administration Policy.”