NCUA’s new low-income definition will benefit military, not credit unions
As the nation struggles with economic difficulties, the global coronavirus pandemic and racial inequality, bank lobbyists were on cue with a push to stifle credit union competition that will ultimately, maximize their profits.
In a recent editorial in American Banker, Credit Union Journal's sister publication, bank lobbyists took issue with the National Credit Union Administration’s effort to consider certain members of the military to be low income when determining a low-income credit union (LICU) designation.
Contrary to what the op-ed said, the policy was well-intentioned and designed to help members of the military secure needed financial services. More so, it was meant to assist military members who are often younger, just starting their careers, frequently mobile and likely targets for unscrupulous predatory lenders. And yes, those with low incomes.
The NCUA simply made a technical correction to its methodology to be more inclusive of military members. Previously, the agency only included the incomes of military members with a physical street address. This left many service members who have Army, Air Force (APO) and Navy (FPO) mailing addresses out of the evaluation.
The recent change was an important step toward promoting financial inclusion, and will sincerely help people.
Underneath the criticisms of this new policy is a request that policymakers treat for-profit banks the same as local, not-for-profit credit unions when it comes to nominal leases on military bases.
Two of the biggest benefactors of this policy request would be Bank of America and Wells Fargo — institutions that have garnered large profits while being fined for consumer harm since the 2008 financial crisis.
In reality, community banks can already obtain nominal leases if they demonstrate to the Department of Defense how their services would benefit the military, something credit unions have been doing for years.
There are clear reasons why credit union members rave about the services they receive. Credit unions have their members’ best interests at heart, which has been documented time and time again.
With bank lobbyists’ continued calls for limiting credit union service to their communities, including to help the nation’s military members, it is important policymakers do not take the bait.
Credit unions will continue focusing on providing the most affordable products and services to American consumers as possible.
Banks should retire these old, worn-out arguments and focus on helping consumers.