Credit unions have an excellent record of serving the underserved and if more financial institutions acted like them there would be no need for the Community Reinvestment Act, CUNA and NAFCU each wrote the House Financial Services Committee in the wake of today's hearing on expanding the measure.
"Credit unions have not-and do not-engage in redlining; credit unions continue to lend when others have reduced credit availability; credit unions serve their members at all income levels; and increasing the regulatory burden on credit unions could prove harmful to member service. In short, credit unions have done nothing to deserve the regulatory framework that has been rightly imposed on banks for their misdeeds," wrote CUNA President/CEO Dan Mica.
NAFCU Executive Vice President for Government Affairs B. Dan Berger wrote that "As many in Congress have wisely noted, if all financial institutions acted like credit unions, there would be no need for CRA. We firmly believe that placing CRA requirements on credit unions would create new costly regulatory burdens without public benefit--a solution in search of a problem."
Both Berger and Mica refuted a report by the National Community Reinvestment Coalition, which criticized credit unions' record of serving the underserved. They each said that coalition made selective use of the data and failed to note that credit unions make smaller loans than banks and thrifts and have a higher percentage of loans going to low-and moderate income communities.
Berger and Mica both noted that credit unions have sought authority from Congress to serve more underserved communities but those efforts have been opposed by banks.
Today's hearing is focusing on efforts to expand the Community Reinvestment Act. Under a bill introduced by Rep. Eddie Bernice Johnson (D-Texas) credit unions along with independent mortgage companies, mortgage company affiliates of banks, insurance companies and securities firms would be part of a group of "nonbank institutions" covered by the measure, which was enacted in 1977.