New Congressional Study Finds CUs Shifting from Underserved

WASHINGTON, DC – 12/4/2006 -Yet another government study released Friday indicates that credit unions’ membership is becoming less focused on people of modest means and more focused on higher income individuals. The new study was released by congressional think tank the General Accountability Office just two weeks after NCUA released its own study purporting to show that credit union service is focused mainly on the lower- and middle-class.

It is sure to raise the level of debate in Congress on whether credit unions should have some kind of Community Reinvestment Act-like requirement. That is because the GAO study was based on more recent data, from 2004, than NCUA’s, which only measured up to 2000--before the massive shift to community charters among credit union took affect. Even more troubling, the GAO study shows a greater portion of the consumers served by banks, than by credit unions, are considered of low- or moderate-income.

The GAO found that the portion of credit union members considered low income declined from 16.4% to 14.5% between 2000 and 2004; and the portion considered moderate income fell from19.3% to 16.6%. During the same period, when the number of community chartered credit unions doubled to more than 1,000, the portion of credit union members considered upper income rose from 42.6% to 48.8%. The make-up of the banks’ consumers remained about the same during this period. The data appears to support the banks’ criticisms that the continuing expansion of credit unions has coincided with a shift form their original focus of serving people of modest means. (CU Journal)