Financial Inclusion 2017

2017 Advocacy Platform

The National Federation of Community Development Credit Unions promotes the financial independence and well-being of working families and communities by expanding access to safe and responsible financial products and services through credit unions.  More than 280 credit unions are certified as Community Development Financial Institutions (CDFIs) investing in economically vulnerable communities.  These CDFI credit unions or CDCUs currently serve more than 7.4 million members with more than $70 billion in combined assets in rural and urban communities across 46 states.  As the national trade association and CDFI intermediary committed to expanding, growing and strengthening these mission-driven credit unions, we advocate for policies that strengthen the institutions and the members and communities they serve.

1. Invest in Community Development Financial Institutions (CDFIs) to rebuild American infrastructure and local economies

CDCUs are one of the most effective mechanisms to channel capital into under-resourced communities, including those left behind by the economic recovery, lack of business infrastructure and that limited opportunities.  As financial cooperatives, deposits are invested locally and earnings are returned the form of interest on deposits, better rates on lending and more services offered.  CDCUs provide affordable credit to consumers, boost entrepreneurship, expand businesses and facilitate homeownership.

Rebuilding America’s infrastructure must include targeted investment to CDCUs.  The largest dedicated funding source is Treasury’s CDFI Fund.  CDFI Fund awards generate billions of dollars annually in loans and investments to build and improve homes, increase energy efficiency, grow businesses, create jobs, increase job mobility, expand access to affordable health and child-care, and create greater financial capability to expand consumer purchasing power.  The Federation seeks to strengthen the CDFI Fund and increase its effectiveness, specifically to:

  • Preserve and grow appropriations to the CDFI Fund, directing a portion of those resources to expanding consumer lending in underserved communities.
  • Maintain standards and definitions of what constitutes a CDFI.
  • Achieve greater institutional diversity in CDFI Fund awards and increased transparency in the evaluation process.
  • Increase technical assistance to credit unions to expand their financing activities and better compete across all CDFI programs including: New Markets Tax Credits, Capital Magnet Fund, and CDFI Bond program guarantee program which yield returns to institutions and communities.

2. Fulfilling the Promise: Placing the Member First

As financial cooperatives, our institutional interests align with the success and well-being of our members.  This alignment of interests requires a long-term approach to growth and financial sustainability rather than short-term gains from the high-cost products or services so prevalent in for-profit financial service providers.  Predatory lenders undermine the financial and economic security of community development credit union members, borrowers and communities.  CDCU members are healthier and stronger when rational, consistent and durable consumers protections are in place.

CDCUs must have a greater voice and engagement in the development of regulation that will curb abuses from predatory players.  Smart regulation can serve to both even the playing field and ensure healthier borrowers, members and consumers.  By engaging with regulators and legislators to get it right, we will preserve that credit union difference, protect our members and our markets, and allow us and all Americans to thrive together in the future.

The Federation will continue to support the legal authority for the CFPB under Dodd-Frank.   And the Federation will actively work to make sure regulators get it right, developing strong and lasting protections for all consumers while maintaining the cost of compliance.  In this effort, we will:

  • Fight to ensure that for-profit predatory lenders and non-regulated financial service providers are subject to equal supervision and accountability standards as regulated depository institutions.
  • Support stepped-up enforcement of existing regulation particularly in industries that currently lack oversight including: payday lenders, auto title loan companies, mortgage finance companies and private, for-profit Fintech firms pushing high-cost credit on consumers.
  • Engage with the CFPB on new regulation to ensure that it does not place undue regulatory burden on small, community owned and controlled financial institutions.

3. Sustain and grow service to and engagement with low-income and underbanked consumers through regulatory opportunity and incentives at NCUA.

Ensuring regulators recognize the unique value-add of community development financial institutions is critical to increasing service to those who need it most.  The Federation will work vigorously with NCUA to reduce regulatory burden on credit unions, particularly small credit unions, and foster innovative solutions to serving underserved marketplaces.  Successful CDCUs use a lot of complicated products and programs to reach underserved members of our community and have a different set of metrics than a typical mainstream financial institution.  Regulators need to have a better understanding of financial tools and mitigation strategies that enable institutions to take appropriate risk to serve their market well.  They need to support and foster growth into underserved communities and better recognize how leveraging outside capital enable institutions grow and better serve their communities.  Credit union regulators must have a greater understanding and appreciation of the role of financial instruments, particularly secondary capital.

Specifically we seek to:

  • Provide regulatory incentives for credit unions to expand field of membership to serve people of modest means by streamlining the process for to expand into LMI communities.
  • Prioritize the retention of service to low-income members and communities of color in credit union mergers by establishing a higher standard for credit unions that are not low-income and/or minority designated or have not established a proven track record of serving low-income and/or minority credit union members regardless of asset size.
  • Improve regulator training of examiners and supervisors to become better-versed in the use of secondary capital to build credit union financials; and risk management and mitigation strategies to limit the narrow definitions of risk solely driven by consumer credit score and category.
  • Provide guidance on the development of innovative tools to serve young people such as the establishment of youth account parameters.
  • Establish greater transparency in the agency to include examination tools, examiner training and supervisor materials, and clear and transparent processes for addressing grievances with particular agency personnel that provides for greater accountability and resolution.

4. Creating financial stability for individuals and families for all

American working families are struggling.  More than 40 percent of American jobs today pay less than $15 an hour, and most of these low-wage jobs lack important benefits such as paid leave, health insurance or retirement plans. With such a large part of our economy struggling, a commitment to serving low-income working families is no longer a charitable act – it is the future of any financial institution’s business.

Expand Homeownership Supports for low-wealth homeowners including down payment assistance, homeownership counseling, family self-sufficiency programs for section 8 and public housing residents, second mortgage and foreclosure prevention efforts.Our history as credit unions demonstrates that we are uniquely positioned to invest and lend during times of economic stress.  Credit union flexibility combined with policy that promotes homeownership, business creations and wealth retention in lower-income rural and urban areas will help rebuild communities and strengthen families.  The Federation calls upon our allies in the credit union industry to join us in focusing our efforts on policies that build wealth in disinvested communities.  These positions include:

  • Reward CDCUs and CDFI’s who lower home ownership barriers through creative solutions.
  • Small Business and Microenterprise Capitalization:  Expansion of guarantees on small business lending through the SBA and USDA will provide dramatic returns in terms of small business growth and job creation.
  • Build the capacity of local community partners to generate a pipeline of qualified borrowers for credit union flexible financing.
  • Expand outreach and opportunity for immigrant consumers to access safe and responsible lending and provide incentives for financial institutions to be inclusive.
  • Expand technical assistance with programs that target institutions that can create jobs, income and self-sufficiency in rural and urban America.

5. Leveraging Local Economic Development Opportunity

Economic resurgence of our neighborhoods, towns and cities relies upon local economic development and the reinvestment of capital in local economies.  By keeping money within the community, credit unions have always provided the mechanism to stimulate local economic activity and growth.  Local savings and deposits are reinvested within the community in the form of safe and affordable consumer loans, financing for small businesses and investing in the American dream of homeownership.  The need for targeted localized investment has never been greater.

We are committed to building a broad-based coalition of all organizations that seek to place local, cooperative credit unions at the center of revitalizing and rebuilding communities. The Federation will advocate for a strengthened CDFI Fund that recognizes financial inclusion as a critical component of community development; better representation of credit unions across all programs of the CDFI Fund and the reduction of regulatory obstacles to credit unions seeking to invest in high-return and high social impact community economic development projects.

Click here for the 2017 letter to Steven Mnuchin, Secretary, US Department of Treasury, in support of the CDFI Fund

Click here for the Federation briefing sheet for congress members

Click here for Federation member impact stories

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