Senate FOM Bill Introduced to Help CUs Serve the Underserved

Sen. Alex Padilla (D-CA)
Sen. Alex Padilla (D-CA)

Sen. Alex Padilla (D-CA) has introduced the Senate companion bill to H.R. 7003, the Expanding Financial Access for Underserved Communities Act. The House version — authored by House Financial Services Committee Chairwoman Maxine Waters (D-CA) — was included in H.R. 2543, which passed the House floor earlier this year.

With roughly 6 percent of California’s population considered unbanked or underbanked, this legislation becomes a focal point for credit unions’ solution to the problem. The bill allows federally chartered credit unions to serve banking deserts in underserved and low-income communities regardless of charter type. It also allows all credit unions unlimited business lending authority within these communities.

“The California congressional delegation continues to speak with their actions to show their depth of support for credit unions,” said Diana Dykstra, president and CEO of the California and Nevada Credit Union Leagues. “Allowing credit unions to serve banking deserts is vital for our state of nearly 40 million consumers. I would like to thank Senator Padilla for joining Chairwoman Waters as the leaders of this effort.”

Having the leadership of Waters combined with Padilla’s support in the Senate reminds their congressional colleagues that as California goes, so goes the nation, according to Leagues Senior Vice President of Federal Government Affairs Jeremy Empol.

“Since his appointment, Senator Padilla has made a point to collaborate with the Leagues and is now leading our flagship bill,” Empol said. “Throughout his tenure in both the California State Legislature and now as our U.S. senator, he has made a career out of standing up for our charter. He continues to represent the credit unions in our state — and now, nationally. We want to thank he and his team for the continual efforts to advocate for credit unions, and we know he’ll become a household name in this industry.”

With only a handful of legislating days before the end of the calendar year, advancing this bill is the Leagues’ top priority.

The ‘Expanding Financial Access for Underserved Communities Act’
The legislation — which represents the most significant modernization of the Federal Credit Union Act since 1998 — passed the House in June as part of a larger legislative package. It was introduced by Waters shortly after the 2022 CUNA Governmental Affairs Conference (GAC).

The bill would:

  • Allow all federal credit unions to add underserved areas to their field of membership.
  • Exempt business loans made in underserved areas from the member business lending cap.
  • Expand the definition of an underserved area to include any area that is more than 10 miles from the nearest financial institution branch.

More than 750 U.S. census tracts are currently financial deserts, with more than 7,800 bank branches closing between January 2005 and March 2021 according to research by the Credit Union National Association (CUNA). Meanwhile, credit unions opened more than 1,400 branches over the same time period nationwide.

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