March 11, 2022

Thaler: While big banks turned their backs on underserved communities, CUs sought to do more

CapitolNAFCU Vice President of Legislative Affairs Brad Thaler wrote to the House Financial Services Committee Thursday to express support for the Expanding Access for Underserved Communities Act, which would make changes to the Federal Credit Union Act to allow all types of federal credit unions to add underserved areas to their field of membership. In the letter, Thaler explained that opposition from banking trade groups is misguided when considering the vast decline of bank branches in rural areas over the last several years.

Thaler specifically pointed to a Federal Reserve study published in 2019 that details banks closing branches and moving out of these areas.

"The study showed that seven percent of rural bank branches were closed between the years 2012 and 2017 and that number has grown to 11 percent through 2019," wrote Thaler. "Losses are not only concentrated among large banks, which shuttered 19 percent of their total rural branches, but also among community banks, which lost 5 percent.

"Credit unions, on the other hand, were the only financial institution type to add branches in both rural and urban areas, demonstrating credit unions' commitment to their members and serving underserved communities," stated Thaler.

GraphThaler continued to note that public data shows the number of bank branches in rural and underserved areas have declined by 10.8 percent since 2012 while the number of credit union branches in those areas have grown by 2.4 percent.

Thaler explains these numbers have only grown over the last two years during the pandemic, as banks closed more than 4,000 branches since March of 2020, according to an independent National Community Reinvestment Coalition study.

"This is a pace of over 200 bank branch closures a month in the last 2 years," explains Thaler.

In addition, Thaler rebukes the bankers' accusations regarding credit union-bank mergers, a so-called ‘lack of participation’ in the Small Business Administration's paycheck protection program, and the member business loan cap.

Thaler called on the committee to reject the banking groups' arguments and support the Expanding Access for Underserved Communities Act.

NAFCU has long engaged Congress on this topic, with President and CEO of JetStream Federal Credit Union Jeanne Kucey recently testifying on behalf of NAFCU before the Senate Banking Committee to highlight the role of CDFIs and MDIs in their communities and specifically call for changes to the FCU Act that would allow credit unions to serve underserved areas.

Read Thaler’s full letter. Stay tuned to NAFCU Today for the latest on the legislation as it moves through Congress.