Credit unions were one of the last pillars of small-town USA — as American as apple pie, thanks to their wildly popular personal relationships with clients and deep investment in local communities. So of course, that means liberals want to undermine them through today’s harmful “Environmental, Social, Governance” (ESG) craze.
ESG rules seek to undermine free-market capitalism by imposing liberal-leaning social goals that end up backfiring and hurting the very people it intends to help.
I bought my home with a credit union. I’ve spoken to credit union gatherings across the country. I greatly admire the work by credit unions to serve as foundational components of their communities, especially helping underserved populations who might otherwise be shut out of the financial services industry by traditional, big corporate banks.
For example, the Credit Union Times reported that “credit unions serve more African Americans: 17% for credit unions, compared with 12.8% for banks and 13.4% for the U.S. population.”
Samira Salem, a senior policy analyst with the Credit Union National Association (CUNA) conducted a study showing, as the CU Times reports, “Community-chartered credit unions located a higher percentage of their branches in low-income areas, as well as in middle- and moderate-income areas, while banks tended to place a higher percentage of their branches in higher income areas.”
Given this track record, it’s strange that the House just passed the “Financial Services Racial Equity, Inclusion, and Economic Justice Act,” a bill that moves on to the Senate. It aims to bring woke ESG to a credit union near you.
Brad Thaler, vice president of Legislative Affairs at the National Association of Federal Credit Unions, sent a letter to House Speaker Nancy Pelosi outlining his concerns with this bill that increases data reporting burdens and disclosure requirements on credit unions.
“While they may be well-intentioned, we must caution against the burden they stand to place on community financial institutions,” Thaler said. “We believe that these provisions may prove counterproductive to the goal of increasing access to capital as institutions spend resources to comply, rather than use them to aid members.”
The “CAMELS” acronym Thaler later cites in his letter stands for “Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity.”
Thaler said his group was also “wary of language in Title IV, Subtitle B that would tie diversity and inclusion rankings to safety and soundness examinations and CAMELS scores. While we believe that examining diversity and inclusion is important and the issue should be looked at, we do not believe that tying diversity and inclusion ratings to safety and soundness and CAMELS scores is the proper approach to address this issue.”
Translation: House Democrats want to do to credit unions what credit rating agencies like S&P are doing to municipal bond issuers. State and federal officials from the state of Utah sent off a fiery letter to S&P refusing to comply with the ESG disclosure requirements. Utah’s leaders said this use of leftist-leaning metrics could very well be illegal because it places partisanship ahead of fiduciary rules.
Now that this credit union bill is pending in the Senate, the question is whether enough common-sense senators will protect credit unions from it.