KANSAS CITY, Mo. -- Rep. Joseph P. Kennedy 2d didn't attend the Credit Union National Association convention here this week, but his presence was felt.

Industry officials argued Monday that unless credit unions reach out to low- and moderate-income consumers, the Massachusetts Democrat's threat to bring the industry under the Community Reinvestment Act might become reality -- with disastrous results.

"We must do something dramatic and make a dramatic impression on Congress that we're doing what we should be doing," said Ed Gallagly, president of Florida Central Credit Union. "If we fall under CRA the perception is going to be, 'Damn, credit unions have failed to do the right thing.' Then we could lose the tax-exempt status."

Mr. Gallagly said he believed the industry must m9ve in the next 18 months to head off a legislative remedy. Institutions must expand their membership fields to bring in people who need financial services and can't get them elsewhere, he said.

According to a CUNA survey, the average household income of a credit union member is $42,000, which indicates that, as a whole, the industry might be failing in its historic mission of serving "people of small means."

"We should almost feel guilty about serving people of affluence," said Armando Cavazos, president of Credit Union One, Ferndale, Mich. "If we lose our soul, the rest will be taken away little by little."

A CUNA task force on the issue, which included Mr. Gallagly and Mr. Cavazos, presented its .findings at the convention.

Every consumer should have access to a credit union, according to the report. Credit unions also should deliver "life-line services to people in need," the task force said.

The statement advocates more than One credit union serving a membership base -- something that some small credit unions oppose. Two credit union officials at the meeting expressed opposition to larger credit unions encroaching on their membership.

But members of the panel lambasted that attitude.

"The idea/of protected turfs is obsolete and totally self-serving," Mr. Gallagly said. He also decried some credit unions' practice of cherry-picking affluent employee groups and ignoring low- to moderate-income ones.

These two income groups represent about 40% of Florida Central's membership field, he said.

"It's very, very expensive and very, very labor intensive," he said, but credit unions must serve everyone if they are to fulfill their purpose.

Industry and regulatory lobbyists at One Session said they expect the question of extending CRA to credit unions to reemerge in the next Congress.

Most of the questions expressed fear of compliance requirements and cost of being brought under CRA.

On a related note, James A. Brodsky, a lawyer with Weiner, Brodsky, Sidman & Kider of Washington predicted at a session on fair lending laws that the Justice Department might soon investigate credit unions for noncompliance.

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