If the NCRC's true intentions were to increase service to those who are truly underserved, a more productive way for it to get its point across would be to work with credit unions not against them. The group should try to nurture credit unions' interest in expanding service to those of modest means rather than requiring arbitrary reporting via CRA that will take time away from doing just that.
In fact, in the NCRC's original 2005 report, Credit Union Times found that the National Federation of Community Development Credit Unions, which has a working relationship with the NCRC, was not even consulted on the study. A spokesman from the federation confirmed that it was not consulted this time around either. The NFCDCU has stated that CRA is not necessary for credit unions because of their unique structure.
Credit unions were not created to serve all people of modest means; they were created to serve all people of modest means within their fields of membership. The nuances of FOMs' restrictive parameters were completely discounted by the NCRC, demonstrating its complete lack of understanding of credit unions.
The NCRC should take the time to read its own study. It states: "An important segment of credit unions, including community development credit unions and low-income credit unions, remains devoted to serving people of small means, but the industry as a whole has matured to the point at which 146 credit unions have $1 billion or more in assets and collectively own more than $356 billion."
So what?! Their leap in logic is astounding. Because a credit union is large, it isn't serving people of modest means? Absurd. Ask any of the enlisted men who sign up with $39 billion Navy Federal when they find themselves in boot camp. And what about the outreach to the underserved done at $1.5 billion GECU in Texas, or teachers who can afford their housing only because of the efforts of $18 billion State Employees' CU in North Carolina?
The NCRC repeatedly states that banks are serving low- and moderate-income consumers better than credit union, citing various skewed stats. For example, credit unions beat banks in HMDA data regarding the percentage of loans to LMI borrowers, yet credit unions are defeated by the banks in percent of loans to African-Americans, Hispanics and women. Could this possibly (probably) be because credit unions don't have to track this data and therefore don't have it? The NFCDCU said that in its own research efforts, the tracking has been a road block. So if credit unions beat banks on LMI borrowers in a colorblind example might that mean the problem is tracking and not discrimination?
I moved a few years ago from one county in Maryland to a neighboring county. The second county is not only far more diverse ethnically, but it is also more affluent. My point is that a credit union serving that first county does not have the same opportunities to serve minorities but probably has more opportunity to serve those of modest means. I find it offensive that NCRC equates modest means with minorities.
Part of banks' CRA requirements includes investments in the communities they are supposed to be serving. Where do you suppose banks are investing this money? In community development credit unions. Banks are farming out their CRA responsibilities to credit unions. Can the banks-which by the way help fund the NCRC through, you guessed it, CRA required investments-be any more hypocritical?
Credit unions were also founded to bolster thrift among their members, which cannot be measured with the HMDA data that NCRC heavily relies upon. Credit unions provide lower minimum CDs, lower minimum checking accounts and savings accounts, and innovative savings accounts, like IDAs. They also provide volunteer income tax assistance and give heavily to Children's Miracle Network hospitals and other local charities.
The NCRC also criticized the NCUA for debating the definition of modest means. Chairman Johnson made a very unfortunate misstatement at the House Ways and Means hearing four years ago that most in the room (lawyers, lawmakers and lobbyists in designer suits) would consider themselves of modest means, which the NCRC quoted in its report. This is nothing more than a smelly red herring.
But the agency is right in stating that defining who is of modest means is not cut and dry. In probably more than 95% of the country, my family could live very nicely on what we make, but I live in a town where my household income is below the median. So am I of modest means or am I not? I don't feel like it, but maybe I am. It's legitimately debatable.
No matter how the NCUA and credit unions have worked to expand their reach, credit unions continue to be severely hamstrung from serving underserved markets by FOM restrictions. Even as the NCUA worked to expand credit unions' adoption of underserved markets, the ABA-I'd swear Keith Leggett wrote this report for NCRC though he denies it-sued the NCUA on a technical glitch in CUMAA to keep credit unions from expanding their service in underserved markets.
With its report, neatly timed on the eve of a hearing on expanding CRA, NCRC is merely looking for a larger pool of CRA money to swim in. As of press time, credit unions had not been invited to testify at the hearing, though NCRC was on the guest list. I hope that changes. Shame on lawmakers for helping forward NCRC's propaganda and not allowing credit unions to even defend themselves. Shutting out credit unions from testifying at this hearing is slamming the door on democracy.
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