The recently released report on unbanked and underbanked households by the Federal Deposit Insurance Corporation should be yet another wake-up call for financial institutions across this country and especially credit unions.

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

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

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

• Ability to accept secondary capital subordinated notes which count toward capital, 
• Ability to accept nonmember deposits from any source (not just other credit unions),
• An exemption from the member business loan statutory ceiling, and
• Eligibility to participate in the community development revolving loan program (grants and low-interest loans to improve and expand services to members)

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

In addition, the NCUA board has approved an alternative loan program for credit unions to offer. The loans provided through the program have features similar to the popular payday loans being offered by some alternative lending institutions, except at a much lower cost to and with better terms for the borrower. The board wanted credit unions to be empowered to provide the type of loans their members needed and wanted at their credit union, and hundreds of federal credit unions now offer the product.

The actions of the NCUA board are meant for credit unions to be able to offer more products to their members. Having provided credit unions with these new tools and incentives, they are now better positioned to do something about the unbanked, underbanked and underserved. With a recommitment and a rededication to helping those that need their services most, credit unions, as they have so many times, can make an impact, can make a difference and can turn the FDIC numbers around and put us on the right track to doing what needs to be done.

Michael E. Fryzel

Board Member

NCUA

Alexandria, Va.