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Publisher Mike Welch’s column in Credit Union Times is always a must-read, and in the July 3rd issue, he asks an important question – “Why should credit unions document their service to low-income people?” After reading his column I wondered, “why wouldn’t credit unions want to document their services to low-income people?” Let’s go back to the roots of the credit union movement (movement, not industry). During its formative years in the 1920s, credit unions were established because people needed a safe place to save and a source of inexpensive credit. There was an emphasis on service, not profit. Credit union organizers built on a major principle of cooperatives – “people helping people.” By pooling their resources, credit union organizers believed that people could achieve goals that could not be reached acting individually. This goal of empowering consumers is further described in 1934 when President Roosevelt signed the Federal Credit Union Act into law, authorizing the establishment of federally chartered credit unions in all states. The purpose of the federal law was “to make more available to people of small means credit for provident purposes…” Credit unions are not merely another type of financial institution. We are, rather, an outgrowth of a grassroots movement. And our tax-free status reflects this history. Discussions about serving low-income consumers tend to focus on limitations due to data collection or field of membership regulations. However the foremost principle of credit unions should be to extend services to as many consumers as possible within a FOM. Credit unions are not exclusive groups; we should aim to serve as many people as possible. So here’s another question – How can we demonstrate our unique heritage and principles if we don’t document services to low-income people? The problem is that the credit union movement is looking more and more like the banking industry. A recent application to NCUA for a charter expansion in Pennsylvania was for an area serving over 1.8 million people. HR 1151 may have given us what we wanted – the ability to expand to serve large areas and populations. Maybe it was a pyrrhic victory. Now comes the baggage. As Senator Paul Sarbanes, Chair of the Senate Banking Committee recently asked, “If credit unions are no different than banks, why should they enjoy a different tax treatment and regulatory structure?” In his column, Mr. Welch accuses the Woodstock Institute of being a “sideline critic, sticking its nose where it doesn’t belong.” In reality, Woodstock is hardly a critic. The Institute has a long history of working on issues of lending and basic financial services. Woodstock has been largely supportive of the CU movement, from research recognizing the extraordinary work of community development credit unions over a decade ago to an analysis of the important impact of secondary capital for low-income credit unions released earlier this year. Maybe our friend didn’t change. Maybe we did. Ed Jacob Manager, North Side Community Federal Credit Union, Chicago, Ill. Board Member, The Woodstock Institute

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