Vice Chairman Hood Voices Concern Regarding Board's Field of Membership Rule
for Serving the Underserved
Vice Chairman Hood votes against proposed change to NCUA's field of membership rule and offers an amendment to ensure access to affordable financial services for the underserved
June 22, 2006, Alexandria, VA- National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood stated today that the NCUA's Board action to approve a proposed amendment to the NCUA's field of membership rule at monthly board meeting (Section 701.1, and chartering manual, (IRPS) 06-1 ), regarding limiting the addition of underserved areas to multiple common bond credit unions and revising facility requirements for underserved areas came at a "seminal moment" for America's credit union system.
Vice Chairman Hood voted against the field of membership rule, which in his view, "restricts credit union service to Americans who are often left behind in the financial services mainstream." Additionally, Vice Chairman Hood proposed his own amendment to the rule which would provide access to more underserved residents and consider the flexibility to serve potential members with reasonable proximity based on a credit union's business plan.
"While I greatly appreciate the time and energy our agency has given this proposal, I truly wish that the Office of the General Counsel could have gone further in ensuring that America's underserved consumers continue to have access to credit unions, " said Vice Chairman Hood. "I believe that the proposal, as presented, benefits the bank trade groups and their lawyers, but not the underserved people who really need a helping hand. Because the staff recommendation does not allow credit unions to go far enough in serving the underserved, I, after careful consideration, and with all due respect, will not be supporting this proposal."
Vice Chairman Hood firmly emphasized the importance of reaching out to the underserved and highlighted that amending the field of membership rule would provide an opportunity for the future of the credit union system to make substantial progress in reaching the underserved. "It is not, and should not be a zero sum game where America's most vulnerable consumers are used as pawns in a chess game. Under this scenario, the bank trade groups and their lawyers win, underserved consumers lose. They lose access to having a choice of a financial services provider, access to affordable mortgage products to achieve the American dream of homeownership, and access to the trusted mechanisms that allow them to save for their families' future."
"I am disappointed that the bank "trade groups" have placed this agency in a position where we have to limit credit unions' ability to serve the underserved. Although I am new to the credit union system and to NCUA, I am not new to serving the underserved. Having spent most of my professional career as a banker, in management posts that stimulated community development activities such as affordable housing, small business development, public-private partnerships, and financial literacy, I believe that banks and credit unions can all play a role in serving the underserved."
"NCUA must not retreat in defeat and capitulate to the bank trade group attacks and leave underserved people without access to the lower-cost financial products that credit unions are uniquely equipped to provide. In limiting the options that underserved consumers have to a financial services provider, the underserved remain just that - underserved. Communities with healthy banks and credit unions give underserved consumers options in selecting a financial services provider who can best meet their needs. Communities without financial institutions serving the underserved leave America's most vulnerable consumers to the hands of predatory lenders, payday lenders, and pawn shops."
Vice Chairman Hood offered an amendment to the proposal before the Board which contains two goals:
- Enabling multiple common-bond credit unions to convert to community charters and retain their underserved areas, if the credit union has served that underserved area for two years or more; and
- Retaining the current provision which allows credit unions that have a preexisting office within close proximity to the underserved area and not require a facility within the underserved area itself.
After Board discussion on the proposed field of membership rule change, excluding Vice Chairman Hood's proposed amendments, the rule was approved by a two vote to one margin, with Vice Chairman Hood voting against the staff recommendation before the Board.
The final rule may be viewed in the Board Action Bulletin posted on NCUA's website: www.ncua.gov/NCUABoard/board_reports/board_reports.html
The National Credit Union Administration is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund (NCUSIF), insuring the savings of nearly 85 million account holders in all federal credit unions and many state-chartered credit unions. NCUA operations are funded by credit unions, not tax dollars.
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