So you have been in the industry for years and think you knowcredit unions? Have you heard of this: Credit unions should onlyserve people who are impoverished, destitute, unemployed or onwelfare. That's directly from the Federal Credit Union Act--NOT!But if you have been following the saga of banker attacks on whocredit unions were chartered to serve, that silly line wouldn'tseem so silly.

There is so much made about credit unions being chartered toserve those of "modest means." It's become the basis for all otherbanker attacks. Bankers say credit unions have become too expansiveand are offering too many bank-like services. If credit unions wereonly serving those of modest means, they wouldn't be expansive andwouldn't be offering more bank-like services. (Does that meanpeople of modest means can never rise out of their modest meansclass to where they would need more services like member businesslending? That's an argument for another day.)

Some in the credit union world have even discussed definingmodest means to beat the bankers to the punch. That would be a verybad move, especially after seeing the long-awaited results ofNCUA's data collection pilot.

Kudos to NCUA and its framing of the data collection report. Theagency put its statistical findings in context, and that context ismost importantly that credit unions can serve only those withintheir field of membership. As the report points out, 80% of creditunions still serve members based on a common bond of occupation orassociation. Despite the rise of community charters, the commonbond still rules, and that common bond has led to the demographicmakeup of members: working, middle-class Americans. That's whocredit unions are serving, and we all know it. That doesn't meanthey don't reach out to the underserved, but the common bondhistory still shapes the demographics. It will change as communitycharters grow. As the study found, community charters are doing abetter job of reaching out to the underserved because a common bonddoesn't restrict them. That was nice brick laying by NCUA forfuture changes.

The report also properly points out that bankers are soconcerned about credit unions helping the underserved that theytook it upon themselves to limit all federal credit unions, exceptmultiple common bond credit unions, from adding underserved areas.Bankers are clearly looking out for the welfare of the underserved,yeah right. Before the ink was even dry on NCUA's data collectionreport, CUNA announced that it would be pursuing a legislativeinitiative to allow all federal credit union charter types to addunderserved areas. That would simply right a wrong that was done tocredit unions and CUNA is right to waste no time in announcing itsintent. The banker backlash isn't going to be any less if they waituntil next year, so why not? The key though will be how it isincorporated as a bill, standalone or with CURIA, etc. I stillthink CURIA is a long shot with the current member business lendingprovision.

Back to the study. It found that credit unions serve 60% ofthose with median family incomes under $60,000, 82% of those with$75,000 or less, and 96% of those with $100,000 or less. Is it meor do these numbers not say much? You can throw a dart in a packedmovie theatre (a dart might be bad) and I'm sure just abouteveryone you hit would be under $100,000. The bottom line is mostcredit union members fall within the $30,000 to $100,000 incomerange. What does that mean? Members are employed, working-classpeople.

When the Federal Credit Union Act was written, as the reporthighlights, most citizens were blue-collar workers. It was a timewhen manufacturing ruled the day and those "modest means" jobsdominated, certainly not the case in today's America. The bankerswant credit unions to be regulated based on the economy in 1934.Give me a break. Today, many families have two parents working inwhite-collar jobs in offices to make ends meet. Are they not"modest means" because they aren't impoverished? You can easilymake the argument that $60,000 is indeed "modest means" whenconsidering the costs to raise a family today.

This is why I steadfastly believe no matter how many of thesestudies come out, to start defining modest means is senseless. Itwill only box credit unions into some very low-income level thatwouldn't equate to what "modest means" meant back in 1934. Why do Iharp on defining modest means? Because I know that there are creditunion leaders who are still talking about defining it, and if theydo so they play right into the bankers' hands. As far as bankersare concerned, my silly line--Credit unions should only servepeople who are impoverished, destitute, unemployed or onwelfare--isn't silly at all. --Comments? [email protected]