What President Biden’s Infrastructure Bill Means For Credit Unions
On Monday, November 15, 2021, President Biden signed the much-talked about $1.2 trillion infrastructure bill into law. This bill is just one of the key pieces of legislation that make up the current administration’s economic agenda, and if everything ends up passing, the effects it will have on the country will be far reaching. Of course, legislation influences credit unions too, so here’s what the new infrastructure bill means for credit unions and what could be in store for them in the future if the rest of Biden’s agenda becomes law.
Internet Improvements
In terms of the coming infrastructure improvements, most of what’s in the bill, such as modernizing rail and public transit, updating and rebuilding the electric grid, and investing in electric vehicles, won’t have much of a direct impact on credit unions and their daily operations. However, there is one part of the new law your credit union should keep an eye on regarding its impact on your respective communities: improved and greater access to broadband. The legislation calls for a $65 billion investment in improving America’s broadband infrastructure, and in addition, will help make internet service more affordable, improve service in areas that are not providing the best service, and help lower income families get access to the internet.
As the world became more digitized during the COVID-19 pandemic, more credit unions turned to digital solutions and apps to serve their members where they are and do so more efficiently. Naturally, it becomes more difficult to provide those services in places where there is a lack of broadband, and if a member doesn’t have good, reliable internet service, they won’t use your digital services no matter how efficient they are. For credit unions located in rural and/or underserved areas, this presents a great opportunity to further market your apps and digital lending products to those who were not able to use them before, including those who are not members of your credit union already!
Recognizing Reconciliation
While the infrastructure bill will provide credit unions with more power to reach members and non-members digitally, the reconciliation bill is the one credit union leaders are keeping an eye on according to the NAFCU VP of Legislative Affairs, Brad Thaler:
“We are still reviewing the text. But the infrastructure deal has been baking for a while. The biggest effects for credit unions will be in the reconciliation bill.”
The reason the reconciliation bill is being watched so closely is a provision to give more power to the IRS. According to CNN, it would allow the IRS to better ensure that everyone pays what they owe in taxes, and much of their focus would be on Americans on the higher end of the income spectrum and not those earning less than $400,000 a year. Additionally, the money collected would go toward paying for the social projects listed in the bill such as childcare, universal pre-K, paid sick and family leave, and investments in combating climate change.
The problem that some credit union leaders have with this part of the legislation is that it would require all financial institutions to report all account inflow and outflow out of all banking accounts with $10,000 dollars or more to the IRS on an annual basis. Immediately, NAFCU fought back against the provision, and while the Biden administration and Congressional leaders have recently backed away from the provision, the final bill could still have this reporting requirement within its text. In a joint letter from NAFCU and several other cooperative organizations, they stated that while they “share the Administration’s goal of building a more inclusive and equitable financial system,” they found this new reporting system to be invasive and believe this solution is not the most sound. The letter then went on to express security issues that could come with this new provision and mentioned the fact the IRS has been a victim of security and data breaches in the past, so if a breach were to occur after this provision is put in place, the personal and financial data of millions of Americans could be at risk.
Another reason the letter’s authors made for their opposition is the potential for degradation of trust in financial institutions, including credit unions. Having that trust is key in credit unions’ relationship with their members, and they fear the provision could deter those who are financially vulnerable from seeking the services they need at a credit union.
In conclusion, the Biden agenda will impact credit unions for years to come. Depending on what all gets passed, there could be negative consequences that will have to be faced, but there are also opportunities for credit unions to grow their membership and improve their quality of service.
