California Spanish Language Media Report on State, Federal CU Legislation

LOS ANGELES – Legislation pending at the state and federal levels to allow credit unions to better serve Hispanics in the United States – particularly those who want to make international remittances – has attracted the attention of major Spanish-language media in the Los Angeles area. Within the last month, the 126,000-circulation newspaper La Opinin, and television station KMEX, an affiliate of the Spanish-language Univision network, both carried stories about legislative efforts to make international remittances more affordable. Both news outlets reported on efforts by U.S. Rep. Joe Baca, a California Democrat, and Democratic state Sen. Joe Dunn to pass legislation aimed at making it easier for credit unions to serve the underserved. Baca’s bill, HR 4384, would amend the Federal Credit Union Act to allow federally chartered credit unions to offer check cashing, money orders and remittance services to the general public. “More than 12 million Hispanic immigrants frequently send money to their countries of origin,” Baca told the newspaper. “Unfortunately, the costs of remittances are very high. We need to diminish the costs of remittances and a way to achieve this is by promoting competition in this industry.” His bill has been referred to the Committee on Financial Services. Dunn’s SB 1292 bill, introduced Feb. 17 in the California Legislature, would allow state-chartered credit unions to offer similar services to anyone in their general field of membership, even if they were not members of the credit union. “This bill, until Jan. 1, 2012, would authorize a credit union to cash checks, sell negotiable instruments, and sell money transfer instruments to any credit union member, depositor or person within the field of membership,” Dunn’s bill states. Dunn’s bill is supported by the California Credit Union League and the San Mateo Credit Union but is opposed by the California Bankers Association. The state’s analysis of Dunn’s bill said it would “provide financial services for those in low-income communities and allow credit unions to establish a relationship with unbanked or underserved potential members and lead to the establishment of a formal banking relationship.” “This legislation would permit credit unions to provide financial services that are highly utilized in low-income communities, like check cashing, issuing money orders and transferring money to foreign countries, to all persons eligible for membership in the credit union, regardless of whether they have an opened account,” the analysis said. Dunn’s bill is part of a measure he introduced last year dealing with the establishment of low-income credit unions. That measure never made it out of the Senate Appropriations Committee. Baca told La Opinin that 44% of the Latino population does not have a bank account. “We’re talking about almost half of the population that does not have access to bank accounts or credit cards,” he said. “By allowing credit unions to compete, we will be saving a lot of money for those who send money. Those most in need will receive more money.” Dunn’s bill cited a Federal Reserve Survey of Consumer Finances that reported 24% of Latinos and African-Americans are unbanked. “While the problem persists across demographic lines, it disproportionately affects minority communities,” it said. “Twenty-four percent of Latinos and African-Americans are unbanked, while only 5 percent of whites lack banking services. This problem is being compounded by bank consolidation and the resulting closure of branches in communities. “A formal banking relationship benefits both individuals and communities,” it added. “Communities with well-functioning financial markets are more resistant to economic downturns and can more readily take advantage of economic growth. Greater mainstream participation, therefore, can help stabilize and revitalize communities. For individuals, a banking relationship results in asset building and wealth creation that can be used in retirement or coping with unforeseen financial circumstances.” The news segment that aired on KMEX, the most widely watched Spanish-language television station in Los Angeles, featured an interview with Elsa Montes, vice president of membership development for Arrowhead Credit Union. “The greatest benefit is that people are going to save money, because now they’re paying really high costs for basic banking services,” she said in discussing the legislation by Baca and Dunn. “With credit unions, they will receive services at a very low price.” The La Opinin article also quoted Maurice Calderon, vice president of Arrowhead CU, and Mark Lowe, a spokesman for the California Credit Union League. -