The original credit union bill, the Credit Union Regulatory Relief Act (H.R. 5519), would have allowed any federal credit union to branch into entire cities and counties by claiming they are underserved. (Current law allows only multiple-common-bond credit unions to expand into "underserved" areas. When the National Credit Union Administration illegally extended that authority to other credit unions, ABA, the Utah Bankers Association and Utah banks successfully sued.)
House Financial Services Committee Chairman Barney Frank (D-Mass.) made substantive changes to the bill after bankers strenuously objected to an attempt in April to slip the bill through the House using a parliamentary procedure reserved for noncontroversial bills. The changes respond to the specific concerns ABA's banker leadership had identified with the original bill. The reworked bill, among other things, would:
- Narrow the definition of "underserved area" to census tracts that meet a low-income test and in which fewer than 50 percent of the families earn more than $75,000 annually.
- Eliminate grandfathering of areas currently deemed underserved by the NCUA.
- Require the NCUA to publish meaningful annual reports assessing how well credit unions are meeting the needs of those in their underserved areas. Such reporting requirements have been a long-time goal for ABA.
- Limit the kinds of underserved business loans that can be excluded from credit unions' business lending cap.
- Limit the ability to offer short-term payday loans and prevent the use of this section to expand consumer lending.
Because many of the bill's provisions go further than current law to ensure credit unions focus on people of modest means, ABA decided not to oppose the legislation. And while Chairman Frank's support for the bill virtually ensures its passage by the House, the prospects in the Senate, where no companion bill exists, are less certain.