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WASHINGTON-While CUNA was making sure key members of Congress are aware of the “hypocrisy” of the American Bankers Association’s latest lawsuits against NCUA, the ABA was busy pointing out to lawmakers that there is no evidence that credit unions are fulfilling their social mission. “On behalf of the nation’s more than 8,800 credit unions and their 87 million members, I am writing to call your attention to a cynical and hypocritical effort by the banking industry to deprive low-income people of access to financial services,” CUNA President and CEO Dan Mica wrote in a Jan. 6 letter. The message was distributed to the House and Senate leadership, the Senate Banking and House Financial Services Committees, the Utah delegation, the Black and Hispanic Caucuses, the Democratic Leadership Council, and the co-sponsors to the Credit Union Regulatory Improvements Act (H.R. 2317). “As you may know, in testimony before the House Ways and Means Committee on Nov. 3, 2005, an American Bankers Association representative attacked credit unions for “abandon[ing.their] mission to serve those of small means,” a charge that is patently false.” Mica continued, “What you may not know is that, just two days earlier, the ABA and other bank parties had filed a lawsuit seeking to prevent most federal credit unions from serving low-income areas. This is the latest round in years of ABA litigation aimed at crippling credit unions; another case raising different issues was filed in Pennsylvania on the same day. “The Utah litigation is particularly shameful because it demonstrates that the ABA has no real concern about service to people of small means-and is willing to say anything and do anything to limit consumer choice in the financial services marketplace.” Mica charged that the ABA’s action to limit service to those of modest means is “wholly inconsistent” with credit unions’ mission. “Credit unions have always served those of modest means – and we want to do more,” Mica commented. “The bankers on the one hand criticize us for not doing enough to serve those of modest means while simultaneously trying to stop us from doing more.” Responding to CUNA’s scathing letter, the ABA pointed out that NCUA’s announcement that it will review its underserved area adoption policies is a sign of guilt and that Congress should continue to examine credit union activities. In response to the lawsuit filed by the ABA challenging NCUA’s authority to add underserved areas to non-multiple group credit unions, the agency has placed a moratorium on the practice for community and single-sponsor credit unions. The ABA has stated that the law only explicitly states that multiple group credit unions can adopt underserved areas. However, NCUA has emphasized that Congressman Paul Kanjorski (D-Pa.), in comments in the Congressional Record, said that the legislative language was not intended to preclude other types of credit unions from adopting underserved areas. Specifically, the Jan. 9 memo from ABA Executive Director for Congressional Relations and Public Policy Floyd E. Stoner read, “Over the past few years, the ABA has expressed concern that some credit unions are using the symbol of service to “underserved” areas to justify major geographic expansions of these particularly aggressive, tax exempt financial entities. ABA has also been concerned that the National Credit Union Administration (NCUA), the credit union industry’s federal regulator, has approved such expansions while ignoring clear legislative language that does not support such approvals. ABA’s focus has been on whether the expansions are legal and whether the credit unions are, indeed, serving the underserved.” Community credit unions, such as America First Federal Credit Union named in the lawsuit, are “intended to focus on the underserved in its identified community,” according to Stoner. “The NCUA’s reversal of its prior actions is the direct result of this litigation, and seems to reflect a desire to avoid a negative court decision in this area.” He wrote, “The ABA strongly believes that the credit union charter was intended to meet the needs of underserved populations, such as low-income individuals in underserved communities – after all, the directive to serve “people of modest means” is the primary justification for the credit union industry’s special tax and regulatory benefits. However, we have continually noted that NCUA has engaged in a pattern of actions that reflects an agency determined to ignore the law in its efforts to fuel ever-larger credit union growth, leading credit unions away from their principal mission of serving the underserved. We object to the abusive use of “underserved” charter expansions when they are sham transactions by expansion-oriented credit unions to dramatically enlarge geographically while continuing to serve higher income individuals living and working in those areas.” He noted a lack of hard evidence that low-income individuals have been the beneficiaries of the addition of underserved areas. “In light of recent events and NCUA’s expressed intent to review its underserved charter regulations,” ABA urged Congress to continue examining credit union tax and regulatory treatment, require documentation of service to the underserved, and strengthen credit unions’ focus on serving those of modest means. CUNA’s Mica called the ABA’s comments “a predictable reaction” to his letter “exposing the real effort by bankers – to hamstring CUs by any means necessary.” He added that he is not worried the ABA remarks will gain any traction on Capitol Hill. Mica stated, “In fact, they are trying to wriggle out from the weight of the facts: That their lawsuit blocks credit unions from serving underserved people doing, something they otherwise demand credit unions do and prove. This is typical doublespeak by bankers, who are hamstrung themselves by their own hypocrisy, and we think will be clearly recognized as such by those who read their correspondence.” -

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