12/31/2007
By: Ed Roberts
NCUA followed-up its 2006 report on how credit unions serve their members with a series of meetings around the country to see how the federal regulator might respond to its findings.
The NCUA Outreach Task Force conducted a series of six meetings across the country throughout 2007 and received input from a broad cross-section of the credit union industry, as well as others interested in issues connected to financial services in disadvantaged communities. Now, NCUA is engaged in analyzing and compiling the results of this active two-way dialogue, and is expecting to issue its conclusions in early 2008.
The agencys Member Service Assessment Pilot, issued in November 2006, was conducted in response to concerns in Congress that credit unions may not be serving their low- and moderate-income members as well as they were meant to. The concerns were created by the banking lobby, which convinced the congressional tax-writing House Ways and Means Committee to hold a hearing on the credit union tax exemption. The hearing found no evidence to challenge the tax exemption, but served as a warning, of sorts, to credit unions.
Concerns raised in recent years by the government auditor, the General Accountability Office, and several private groups, like the Woodstock Institute and the National Community Reinvestment Coalition, were that as credit unions continue to grow into mainstream financial institutions much of their service has shifted towards upper income members. But all of the studies concluded that data was sparse and more study needed to be conducted. That was why NCUA conducted its own study. The NCUA study concluded that the make-up of the nations CUs is overwhelmingly derived from low- and moderate-income Americans. The study also found that credit unions overwhelmingly offered low-cost services of some kind, with more than 80% of those offering checking, ATMs and bill payment services for free.
Still, NCUA and the CU lobby continues to emphasize the CU focus in an effort to justify the continuance of the federal tax exemption, a bargain many in Congress see as necessary.
During the six task force meetings the topics discussed included: programs and processes to encourage outreach to underserved communities; value of low-income designation; and data collection on member income and executive compensation.