(January 3, 2007 - New York, NY)  Following NCUA’s recent report on serving people of modest means (“MSAP”) and the creation by the agency of an Outreach Task Force under Board Member Gigi Hyland, the Federation has issued a paper addressing regulatory policies affecting credit unions serving low-income communities. 

The Federation’s policy paper, entitled “Serving Low-Income Communities: Recommendations for the NCUA Outreach Task Force,” includes but expands the range of issues that have been outlined for the new task force. 

The paper argues against changing the definition of low-income, either by restricting it or inappropriately expanding it.  It calls for NCUA to remove restrictions on access to capital – both non-member deposits and equity-like secondary capital – for low-income credit unions.   It argues that use of asset-based peer statistics may unfairly penalize both low-income credit unions and others that invest their resources in serving low-income communities.  While commending NCUA for introducing its “white paper” on CDCU examinations in February 2005, the new low-income policy paper calls for s more systematic implementation of that guidance to examiners of low-income credit unions.  The Federation’s paper also urges changes in the Community Development Revolving Loan Fund (CDRLF) administered by NCUA, including a redirecting the half of the corpus of the CDRLF that is currently idle into deployable secondary capital for low-income credit unions. 

“We believe it is time for a broad reexamination of NCUA’s policies and practices not only with respect to low-income credit unions (LICUs), but also other credit unions that are making efforts to serve low-income populations,” said Executive Director Cliff Rosenthal.  “Our members often report that there is a persistent disconnect between top-level agency policies and their own experiences during examinations.”

“I believe there is a strong, widespread desire in the credit union movement to do more to serve undeserved and low-income people,” added Rosenthal.  “But we won’t succeed unless we can remove some of the barriers and disincentives  that currently prevent many credit unions from doing even more to serve those people who need credit unions most.”

The executive summary and full report are available by clicking here.

© 2007 National Federation of Community Development Credit Unions.