The recently released report on unbanked and underbankedhouseholds by the Federal Deposit Insurance Corporation should beyet another wake-up call for financial institutions across thiscountry and especially credit unions.

There remains a lot of work to be done by financial institutionsif we are ever going to be able to provide good, quality financialservices to those who are underserved.

According to the report, there are nearly 34 million unbanked orunderbanked households in the United States, an increase of 13%during the last two years. Minorities and low-income familiesrepresent the majority of those who are unbanked orunderbanked.

The NCUA recently made it extremely easy and simple for creditunions to attain the low-income designation.When a credit union isclassified as low income, it is eligible to do certain things itcould not do otherwise:

• Ability to accept secondary capital subordinated notes whichcount toward capital, 
• Ability to accept nonmember deposits from any source (not justother credit unions),
• An exemption from the member business loan statutory ceiling,and
• Eligibility to participate in the community developmentrevolving loan program (grants and low-interest loans to improveand expand services to members)

These additional powers are meant to allow credit unions to makemore loans and better serve their members.

In addition, the NCUA board has approved an alternative loanprogram for credit unions to offer. The loans provided through theprogram have features similar to the popular payday loans beingoffered by some alternative lending institutions, except at a muchlower cost to and with better terms for the borrower. The boardwanted credit unions to be empowered to provide the type of loanstheir members needed and wanted at their credit union, and hundredsof federal credit unions now offer the product.

The actions of the NCUA board are meant for credit unions to beable to offer more products to their members. Having providedcredit unions with these new tools and incentives, they are nowbetter positioned to do something about the unbanked, underbankedand underserved. With a recommitment and a rededication to helpingthose that need their services most, credit unions, as they have somany times, can make an impact, can make a difference and can turnthe FDIC numbers around and put us on the right track to doing whatneeds to be done.

Michael E. Fryzel

Board Member

NCUA

Alexandria, Va.