FOM Modernization Bill Passes House Financial Services Committee

(From CUNA News) – The House Financial Services Committee advanced the CUNA-League-supported Expanding Financial Access for Underserved Communities Act (H.R 7003) with a 27-22 vote. The bill represents the most significant proposed update to the Federal Credit Union Act since 1998.

“Thank you to all on the committee who supported this important legislation and credit unions’ efforts to promote financial well-being for all,” said CUNA President/CEO Jim Nussle. “This legislation provides a commonsense market-based solution to reach the nearly one in five households that are un- or underbanked across the country.”

“H.R. 7003 adds underserved communities to credit union fields of membership while also removing barriers to the member-business lending cap for these communities. This measure is really about creating opportunity and access for many who reside in America’s banking deserts. As we have learned during the COVID-19 pandemic, an overwhelming percentage of individuals and small businesses in underserved communities do not retain a local banking relationship, which is a major problem that H.R. 7003 seeks to resolve,” said California and Nevada Credit Union League President/CEO Diana Dykstra. “I want to thank Chairwoman Waters for her continual support of credit unions and our charter. A special thank you to her team, who has spent hours and days working to bring this bill forward. We know they will aid our efforts to bring this bill to law.”

Specifically, H.R. 7003 would:

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

House Financial Services Committee Chairwoman Maxine Waters (D-CA) introduced H.R. 7003 shortly after the 2022 CUNA Governmental Affairs Conference.

More than 750 census tracts are financial deserts, and a net 7,800 plus bank branches closed between January 2005 and March 2021, according to CUNA research. Credit unions opened more than 1,400 net credit union branches over the same time period.

CUNA submitted comments for the record supporting H.R. 7003 and other bills in the markup. CUNA, the American Association of Credit Union Leagues, and all state Leagues also submitted comments in support of H.R. 7003, and CUNA signed onto a letter from the National Cooperative Business Association.

The African American Credit Union CoalitionInclusiv, and the National Association of Latino Credit Unions and Professionals also wrote in support of the bill.