The round-up editorial in the Jan. 9 issue of Credit Union Times offered interesting insight into your outlook for 2008.
However, we strongly disagree with your comments on the Community Reinvestment Act, which clearly has no merit when applied to credit unions. The reason CRA was imposed on banks was because of their "redlining" practices. Former Senate Banking Committee Chairman Phil Gramm said it best in responding to former NCUA Board Chairman Norm D'Amours' proposal to subject credit unions to CRA-like requirements: "By their very nature, credit unions serve their communities...They have little ability to do business with anyone else. Requiring credit unions to document the obvious, that they are serving their members, takes community reinvestment regulation to ever more absurd extremes."
NAFCU has been very active in the Washington arena in opposing CRA, or any similar requirements, and will continue to be so. Let us not forget that, as reflected by Home Mortgage Disclosure Act data, credit unions consistently outperform banks and thrifts despite the fact that those institutions must comply with CRA. Simply stated, in today's most critical aspect of our economy--mortgages--credit unions have consistently proven their worth in serving individuals of lesser income ($40,000 annual income or less). According to the 2006 HMDA data, credit unions achieved a 75% approval rating among mortgage applicants with less than $40,000 income, compared with banks and thrifts, which lagged at 61% and 63%, respectively.
To reiterate, we must respectfully disagree with your assessment that CRA is a foregone conclusion. As former Chairman Gramm said, "... this would be an expensive solution to a problem that does not exist." Credit unions already labor under more regulatory restrictions than banks and thrifts, and, as has been noted by numerous Treasury Department officials, the financial services regulatory burden is the heaviest in the history of our nation.
Fred R. Becker Jr.
NAFCU President
