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Trade Groups Push Back on Including Credit Unions in CRA
Tuesday, November 27, 2018 6:50 AM

Credit unions do not belong in the Community Reinvestment Act, credit union trade groups said in letters to the Office of the Comptroller of the Currency (OCC) and the House Financial Services Committee.

“While not subject to (the reinvestment act) credit unions do have a specified mission of meeting the credit and savings needs of consumers, especially persons of modest means,” Mitria Wilson, CUNA’s senior director of advocacy and counsel, wrote in a letter to the OCC, which is soliciting comments on how to best update the reinvestment act. The regulator cannot add credit unions to the law; Congress would have to do that.

“As you are aware, the CRA was adopted as a punitive measure to punish bad actors—namely banks—for engaging in discriminatory and abhorrent practices such as redlining and disinvestment,” NAFCU President/CEO B. Dan Berger wrote in a letter to the leaders of the House Committee.

Berger said Congress should not add banks to the reinvestment act.

As policymakers struggle with how to update the reinvestment act, the debate once again has pitted credit unions against banks. Banking groups have argued that there is no reason why credit unions are not included in the reinvestment act. Credit unions have responded that by nature, they serve people of limited means.

Congress enacted the reinvestment act in 1977, as part of an effort to encourage banks to meet the credit needs of their communities, including low- and moderate-income communities. Federal banking regulators enforce the law by conducting examinations. In 1995, the law was tailored in an effort to account for different sizes and business models.

The Treasury Department earlier this year issued recommendations on how to update the law. That document did not recommend adding credit unions to the law. However, the Government Accountability Office has suggested that the law be expanded to include non-banks, including credit unions. And Sen. Elizabeth Warren (D-Mass.) has introduced a housing bill that would do the same.

Read more at Credit Union Times.