LATHAM, N.Y. -
Lawmakers in Texas and California introduced bills recently that would create "bank-development districts," specially designed low-income areas that are underserved by banks, but when Credit Union Journal asked whether credit unions would be able to receive the same incentives as banks if they create branches in these districts, too, the answer was a unanimous "no."
"A lot of credit unions are already doing that," New York State CU League Spokeswoman Bonnie Sklar said when asked about the bank development district law. "I don't think credit unions need an incentive."
Sklar stressed that CUs typically place branches in low-income, underserved areas, on their own accord, and offer financial education, too.
Amy Kramer, NYSCUL VP-governmental affairs, said credit unions are not eligible to participate in the state's program that gives incentives to banks in underserved neighborhoods. "[The program] began to correct bad behavior," she said. "Banks were pulling out of neighborhoods that were not profitable."
While credit unions may not need such incentives, that doesn't mean it wouldn't be nice to get them. "Credit unions would love to get incentives for serving the underserved," Kramer said. "This is what we do every day."
CUs Left Out At Banker Behest
Kramer said the banks' incentives include discounts on property taxes and municipal deposits at a favorable rate. She said that the reason CUs do not receive these incentives is simple. "Because of banker opposition," she said. "The banks say 'This is our program.' We don't think it's fair at all. We're the experts at serving the underserved."
In New York, there is a bill sponsored by Democrat Assemblyman Ivan Lafayette and Republican Sen. Hugh Farley that seeks to include New York's credit unions in the State Banking Development Districts program. Lafeyette's has passed the Assembly; the Senate bill has remained in committee.
The bill states: "Credit unions are New York's 'experts' in serving low-income and underserved areas. Allow the 'experts' to bring more affordable for New York's communities by granting credit unions access to the Banking Development District Program."
The Texas bill, which recently did not pass, would have allowed banks that open branches in those districts to be eligible to receive state and municipal deposits at or below market rates, in addition to receiving property tax breaks, according to CU Journal's sister publication, American Banker. "Texas has very high property taxes, so if a bank were to get a tax break, it would be impetus" to open a branch in one of the designated districts, said John Heasley, executive vice president and general counsel for the Texas Bankers Association. But like New York, the bill in Texas, even if passed, would not have applied to credit unions, said Ricky Grady, vice president of marketing and public relations for the Texas CU League.
California's drafted bill, from Democrat Rep. Ted W. Lieu, would offer incentives also to banks already serving such neighborhoods.
"If a bank is already in a neighborhood like that, then that's a good thing," David Ford, chief of staff for Rep. Lieu, told American Banker.
The California bill also does not include CUs, said Tina Ramos-Ingold, public affairs coordinator for the California and Nevada CU Leagues.
The 9-year-old New York law offers banks select state and municipal deposits for two years, partial property tax breaks for 10 years, and other perks for opening branches in specially designated districts.
