<p>INDIANAPOLIS – At the National Federation of Community Development Credit Unions' (NFCDCU) recent annual meeting in Indianapolis, a panel convened to debate how well or poorly credit unions serve lower-income people disagreed about credit union performance but agreed that credit unions need to do a better job documenting how they are reaching out to their poorest members. CUNA's Chief Economist Bill Hampel, along with Malcolm Bush, head of the Chicago-based Woodstock Institute, and Ed Jacob, CEO of the $5.8 million North Side Community Federal Credit Union made up the panel. The disagreements were much as could have been predicted. Bush, whose Woodstock Institute had published a study in February critical of credit union performance with low-income members, reiterated some of the study's findings briefly. He reasserted how the fact that the study had 3,000 respondents argued for its broad applicability to the credit union world as a whole. He also claimed the Woodstock study had been the first study to look at the question of how credit unions served low-income people and cited that as evidence the credit unions were not particularly interested, in an institutional sense, in tracking how well they performed or didn't perform their historic mission. Bush also attempted to refute the argument that credit unions' traditional reliance on employers and employment to determine their fields of membership was the primary factor behind credit unions poor performance serving low-income people. He hearkened back to the court case that led to the industry's efforts to pass HR 1151. Bush reminded the meeting that in the Supreme Court decision in the case the justices were convinced that credit unions could effectively "serve whom they wanted" but had disagreed over whether that was a good or bad thing. "The majority [of the Court] said credit unions added who they want to [to their fields of membership] and that was a bad thing. The minority said they did that and it was a good thing. But the court unanimously agreed that credit unions could effectively add who they wished, and they did not add low-income people," Bush said. The fact that despite this credit unions still serve low-income people so poorly proved that, at the bottom line, they were not interested in doing so, said Bush. Predictably, Hampel defended credit unions' record of serving low-income members. But he varied his defense by citing a Filene Institute study called Who Uses Credit Unions, a December 1999 study that the Institute had updated in August 2001. Unlike the Bush study, the Filene examination of credit union membership grouped people not simply by credit union member vs. non-credit union member. Instead the authors divided the 4,309 households surveyed as part of the Federal Reserve's Survey of Consumer Finances into five groups; those that use neither banks nor credit unions, those that use credit unions but not banks, those that use banks but not credit unions, those that use both banks and credit unions but mostly credit unions, and those that use both but mostly banks. When looked at that way, Hampel said, citing the study, it was evident that while many people had both bank and credit union accounts, a greater proportion of lower-income people in the survey had either credit union accounts alone or used credit union services far more than they did their bank's services. By contrast very few of the wealthier respondents used credit union services more than they used bank services, Hampel said. These facts proved that credit unions serve a higher proportion of poorer people than do banks and were doing a better job reaching out to low-income people than had been portrayed by their critics, Hampel contended. Ed Jacob started his remarks by reading two similar quotes from stories in the trade press. Consultants who were seeking to sell the credit unions some product or service were describing credit union members less in terms of members with financial goals than as potential profit centers for the credit union. Jacob asked the meeting to guess which quote came from a credit union publication and then revealed they both had. A former bank CRA officer, Jacob said that he understood how important it is to have both members who use a full range of credit union products along with those who cannot, but said he was concerned that credit unions were being seduced away from their traditional priorities by a call to become "more like banks." As examples Jacob, whose credit union is Chicago-based, described how Illinois credit unions had not been involved in a state fight for a law to limit predatory lending and how North Side had been the only credit union in the state to apply for funding under the new First Accounts program from the Department of the Treasury. "I think we really have to ask ourselves why that is and what we can do as CDCUs to reach out to the mainstream credit unions about these priorities," he said. The panel agreed, however, that credit unions needed to do a much better job of documenting what it is they do for lower-income people. Hampel told the meeting that CUNA was "actively studying" what it could do to help credit unions provide better documentation. When the topic of the failed Community Action Plan (CAP) regulation arose, Hampel replied that he believed credit union opposition to the regulation came more from a dislike of the former Chairman of the NCUA Board, Norman D'Amours, and a resulting suspicion of the agency, than from a reluctance to report their activity. But Bush challenged that speculation, noting that the regulation had been killed under an extremely popular NCUA chairman. On a related note, NCUA Board Chairman Dennis Dollar warned credit unions of the need for better documentation to ward off any CRA requirement being written into law. Speaking at CUNA Mutual Group's Discovery Conference Dollar told credit unions "your social contract is with members – not with NCUA – and you better live up to it." Bank lobbyists "are gunning for you," he said, "you are a new market for them. It's your challenge – not ours – to demonstrate why Congress shouldn't put credit unions under CRA." [email protected]</p>