FOR IMMEDIATE RELEASE
GAO Study Confirms Credit Unions Lend Less to Low- and Moderate-Income Areas Than Banks
Washington, D.C. (Nov. 6, 2003) - Independent Community Bankers of America (ICBA) today said that a recent study by the U.S. General Accounting Office confirms that not only are credit unions getting larger, they are not living up to their statutory mission of serving people of small means. Furthermore, it raises the question that bankers have been asking for some time. Why are credit unions tax-exempt organizations?
The report, requested by Senate Banking Committee Ranking Member Paul Sarbanes (D-MD) indicates that, because of the virtual elimination of the common bond field of membership requirement, the credit union industry is more concentrated now than it was ten years ago.
Significantly, the report also indicates that based on 2001 HMDA loan application records, credit unions made a lower proportion of mortgage loans to households with low- and moderate- incomes than peer group community banks. GAO pointed out that these results are similar to what other studies by CUNA and the Woodstock Institute indicate — that credit unions serve a higher-income population than banks.
"This excellent report provides evidence that credit unions are losing sight of their statutory mission which is to provide financial services to people of small means," said Ken Guenther, President of ICBA. "As the growing concentration of the banking industry heightened the systemic risk to the bank insurance fund, this report also shows that the growth of ever larger credit unions creates additional risks to the credit union share insurance fund."