<p>WASHINGTON – Despite credit unions' claims that they serve all their members, there is no evidence that they are actually serving their low-income members and recent statements from credit union leaders make it appear the movement wants to forsake serving low-income people, said Malcolm Bush, President of the Chicago-based Woodstock Institute. The Woodstock Institute issued a report in mid-February alleging much higher rates of credit union membership among upper income households than among lower income households. "It is quite clear that important sectors of the national credit union leadership are trying to jettison this mission" to serve low-income people, Bush told a meeting at the National Community Reinvestment Coalition's 2002 annual meeting, which Credit Union Times was covering in Washington at press time. Bush questioned CUNA, NAFCU and the NCUA's assertion, defending credit unions from the charges in the recent NCRC study, that minority and low-income borrowers have significantly greater chances of getting a loan from a credit union than a bank. He called the HMDA data, used by both NCRC and credit union groups, "cloudy" noting that it could "be cut different ways" and implying that studies based upon it looked too narrowly at loans, which are only one financial service. Where credit unions really need to be studied is in their basic services to low-income members, he said. "Amazingly, there is no empirical evidence at all about whether or not credit unions serve low-income people," Bush said. "There is a lot of rhetoric on both sides of the fence, but no evidence. There is no evidence that credit unions whose membership is restricted to a particular employee group are reaching down the income scale within that particular employee group," he added. "We should know that." Bush noted that the 16.1 million low-income people that the NCUA says credit unions added to their fields of membership in 2001 only represent "potential members," not "real members." "Potential members are not the same as real members," Bush said, "and the NCUA needs to be able to tell how many of these potential members become real members." He also questioned how long it took credit unions to move toward serving low-income communities. "Under the underserved community provision," Bush said, "healthy credit unions now have every opportunity to expand into underserved communities.my question is why hasn't there haven't been opportunities before from this very politically powerful movement that is supposedly dedicated to serving moderate income people." Bush set his discussion of credit unions and their service to low-income people against what he called the "historic" mandate of credit unions, quoting from the title of the original Federal Credit Union Act in 1934 and its 1998 version and then pointing to CUNA's Renaissance Commission. "In June 2001, the Credit Union National Association, the largest association, set up a Renaissance Commission which is a hand picked group of credit union leaders," Bush said. That Commission said the statement about serving people of modest means in the 1934 Act was "anachronistic and should be discarded," Bush said. "Credit unions have been extremely successful in making credit for provident purposes available to people of all means," he continued, quoting from the Renaissance Commission report. "And what was the evidence?" Bush asked. "The evidence was, and if I were grading a logic 101 class this person would not pass, the evidence was that there were fewer lower income people in the 1990′s in the United States than there were in 1934." Bush told the attendees that the Institute had already gotten feedback from credit unions about the 3,000-person study "Rhetoric and Reality: An Analysis of Mainstream Credit Unions' Record of Serving Low-Income People" questioning the study's size. "Let me tell you from survey research perspective that's big, and expensive and unusual, that's a very large sample," he said. Bush prefaced his discussion by revealing he is a credit union member and noting that credit union members have much for which they should rightly praise their credit unions. He told a story of joining a credit union two years previously and having a credit union staff member direct him to a higher interest rate savings account over one that offered lower interest. "Has anyone been to a bank and had that experience," he asked the attendees, sparking ripples of laughter in the crowd. But that is why it is so very important to examine what credit unions are doing, he said. He summed up the studies findings for the attendees, pointing out that of the 3,000 Chicago area residents surveyed, 40% of those with household incomes of between $60,000 and $70,000 were credit union members and 35% of those with household incomes over $70,000 were credit union members. By contrast only 12% of respondents with household incomes of between $10,000 and $20,000 were credit union members, he said. Bush told the attendees that examining what credit unions members are doing is very important because of the niche credit unions are increasingly being expected to fill in many communities. "A lot of small banks are telling us that, because of economies of scale, they cannot compete with the big banks in providing basic checking and savings services," Bush said. "At the same time a lot of large banks have declared their checking accounts to be profit centers which must return between 15 and 20% a year.That leaves us with credit unions which are not going to turn around to say `it's not our market and we can't compete' and are not going to make their checking services into profit centers," he said. "I think credit unions are an enormous opportunity to provide basic financial services and get people on the right track in building assets," Bush added. "The challenge is that they deny they're not doing it and the movement is extraordinarily politically powerful. But we have to start at the beginning," he added. Bush did praise "some" credit union leaders whom, he said, had changed their rhetoric since the report had come out. "Some credit leaders have changed their rhetoric from `we do serve low-income people' to saying `our hands are tied, we can't serve low-income people.' We hope the next statement from credit union leaders will be `help us figure out how better to serve low-income people.'"</p>

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