Thursday, August 25, 2011

Common Bond and Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA), which became law on March 23, 1976, says that it is illegal to discriminate in any credit transaction on the the basis of race, color, national origin, religion, sex, marital status, or age.

Congress was very specific that it viewed race, color, national origin, religion, sex, marital status, or age as protected classes in our society.

So, this raises an interesting policy question -- should credit union regulators charter a credit union with field of membership which is based solely upon a protected class, such as religion or national origin?


  1. The act of "chartering" is not a "credit transaction".

    Have one of your ABA attorneys explain it to you.

    Perhaps the same ABA attorneys who in 2005 filed a lawsuit to block credit union service to additional underserved communities.

  2. Dear Anonymous:

    I know that chartering is different from a credit transaction. But that begs the point -- Why charter a credit union if it is not going to extend credit?

  3. Credit unions extend credit, that's what they do. Additionally, there is no evidence of discriminatory credit transactions against protected classes within their fields of membership.

    But this begs the counterpoint -- Why did the ABA file a November 2005 lawsuit to prevent credit unions' service (extending credit) to additional underserved communities?

    The ABA materials online make it look like you were personally part of the work-up on that legal action. This begs an additional question -- what is your personal stand on social and economic justice, denial of service to underserved groups, or this post which seemingly suggests that credit unions formed specifically to serve individual groups of protected classes be shut down, presumably based on the logic they don't solve the credit needs of ALL protected classes.

    Bias and prejudice, even when disguised as logical inquiry, is a sad embarrassment to the American banking industry.

  4. The Federal Credit Union Act plainly states that only multiple common bond credit unions could add underserved areas.

    NCUA broke the law.



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