The state Department of Financial Services issued guidance that lays out the department’s new process for issuing low-income designations to state-chartered credit unions. The New York Credit Union Association strongly supports the move, which creates parity with federal credit unions.
“This is a major victory for the New York credit union movement and the direct result of a yearslong advocacy push,” said Association President/CEO William J. Mellin. “The DFS, and in particular Superintendent Maria Vullo, deserve praise for their efforts to continually improve the state credit union charter. Rolling back the barriers to the low-income designation is a common-sense move that ultimately benefits New Yorkers living in some of the most economically distressed areas of the state.”
The Association for years advocated for the department to make obtaining a low-income designation less cumbersome for state-chartered credit unions. Recent conversations with DFS staff yielded positive outcomes and signaled that the department could move on the matter through the use of guidance.
“DFS supports the growth of New York State-chartered credit unions, which often play an important role in providing financial access and affordable financial services to local communities across the state,” said Vullo. “New York State chartered credit unions serving predominantly low-income members must be supported in their efforts to meet the needs of their members. This action is an important step in helping state-chartered credit unions meet the needs of their members.”
The low-income designation provides credit unions with additional sources of funding and resources, including the ability to accept non-member deposits, eligibility to participate in NCUA’s Community Development Revolving Loan Program, and exemption from the loan limit requirements for member-business loans.
According to the DFS:
To obtain a designation as a “low-income credit union,” a New York State chartered credit union must satisfy the requirements of Section 450-a (5) of the New York Banking law and Section 701.34(a) of the Regulations of the National Credit Union Administration (NCUA) to ensure that they are serving predominantly low-income members. Each section contains two “eighty percent tests” for a low-income designation. These tests require that a majority of the credit union’s members make 80% of the average income of all wage earners, or their family income falls below 80% of the median U.S. household income, or that family or individual income is 80% or less than the median family or individual income for the metropolitan area in which the member resides or in the national metropolitan area, whichever is greater.
The guidance is available here.