While conceding that credit unions "have not been major actors in the subprime fiasco," National Community Reinvestment Coalition President/CEO John Taylor told lawmakers today that credit unions "have not served minority and working communities in a satisfactory manner."
Taylor, in written testimony at a hearing on the Community Reinvestment Act, said that record was good reason to mandate that credit unions comply with the CRA.
Taylor said the poor performance of credit unions and insurance companies in serving low-income areas has resulted in "decreasing the levels of responsible loans and insurance products available in traditionally underserved areas." He cited a previous report by his group that showed credit unions don't provide loans in those areas at as high a rate as do banks, which are covered by CRA.
But Rep. Jeb Hensarling (R-Texas) disputed that assessment and cited data from NAFCU and the Dallas Federal Reserve which showed that credit unions had a better lending record than banks in underserved areas.
"It begs the question of why you want to force institutions to do what they are already doing," said Hensarling, the panel's ranking Republican.
In a letter to panel members, NAFCU President/CEO Fred Becker noted that the CRA was passed in 1977 to punish banks and thrifts for engaging in redlining and disinvestment. But credit unions shouldn't be included because "there has never been any evidence that credit unions have engaged in these illegal and abhorrent activities. Credit unions are inherently invested in their communities, operating unlike other depository institutions with a not-for-profit cooperative structure and a common bond membership."
Although several bills have been introduced to revise CRA, some of which would include credit unions, today's hearing was aimed at a general discussion of the issue and did not discuss the merits of individual pieces of legislation.