Johnson responded that in addition to the underserved area provision, NCUA and credit unions would like to see a risk-based capital framework in the new Credit Union Regulatory Improvements Act, which can help CUs in serving the underserved. By basing capital needed on risk, many credit unions will be able to free up additional capital to go out and do more. Additionally, the "minimal" competition that credit unions present to banks help keep their fees down as well, she said. Congressman Dennis Rehberg (R-Mont.) said he comes from a banking family and asked how business lending fit into credit unions. Johnson first pointed out that the average credit union small business loan was just over $100,000 and that credit unions can only serve their members. "We see that as the mission of credit unions and these micro-loans we see as a part of that service," she said.

Congressman Rodney Alexander (R-La.) said he had a staffer call up a credit union in his area and ask how he could get in on the "stock" the credit union was offering in advertisements playing off the term. The ads, he said, were pulled the next day because he said they were misleading. He asked the NCUA chairman if she felt this advertising was fair, to which she replied she did not, adding that the members own the nonprofit, cooperative financial institutions, but no stocks are issued. In the Trenches

"There is no typical Bethex member," Cousminer, CEO of the community development credit union in the Bronx, told subcommittee members at the March 1 hearing, "but common themes include irregular employment, no prior relationship with a formal financial institution, little or no savings or assets–liquid or otherwise, and a lack of understanding about the American credit scoring system." Yet, the $11 million credit union offers all types of services, including SBA-backed member business lending, account access through check cashing companies and a Volunteer Income Tax Assistance site.

She added, "While the credit union existed for many years without grant support, it would be nowhere near the institution it is today without public funding." Bethex has received $800,000 in grants from the Community Development Financial Institutions Fund, Cousminer said, which was the focus of the hearing; it has also received repeated, smaller technical assistance grants through NCUA's CDRLF. She advocated for a $100 million appropriation after years of the Republican administration cutting the fund. The Bush Administration has requested approximately $29 million for the CDFI Fund, far less than its historic level, which reached $118 million and more recently, had been in the $55 million to $80 million range. Responding to a question from Congressman Ralph Regula (R-Ohio), Cousminer said her community development credit union only has a 3.5-4.0% loss ratio. She explained that the credit union is with the member every step of the way. "I think it's a relationship we build with our members," Cousminer concluded. CDFI Director Kimberly Reed, who had just been on the job about one month, also testified. "I have grappled with the lack of banking services in my Congressional District for years, and so have a firsthand knowledge of what these credit unions and the CDFIs are capable of in an underprivileged area," Subcommittee Chairman Jos? Serrano (D-N.Y.) stated. "Ms. Cousminer's testimony about her experiences in my congressional district are proof positive that there is a solution to the unbanked, and it runs in part through credit unions and the support of the CDFI Fund. Congress has an obligation to support the efforts of these entities as much as possible." Serrano asked Cousminer whether credit unions should be covered under the Community Reinvestment Act. She said, "a large number of credit unions are very concerned about low-income people. They don't need formal CRA. They are doing it, and they are going to do it." –[email protected]