<p>WASHINGTON- Recent comments by National Community Reinvestment Coalition (NCRC) President John Taylor on NCUA's repeal of the Community Action Plan (CAP) and credit unions in general "are clearly off the mark," NAFCU President and CEO Fred Becker said in a prepared statement. Taylor released a statement the day of the NCUA Board meeting where the board members repealed the CAP, replacing the interim final rule with a final rule. A lawsuit, brought by NCRC in January, questioning NCUA's procedure in passing the interim final rule, is pending. NCRC also released a study, shortly after filing suit, which alleged that credit unions are more likely than banks or thrifts to deny loans to minority applicants. "When considering that the credit union movement is a democratic movement, it is a sad irony that the NCUA repealed the CAP," Taylor said. "The credit union movement was formed by the principle that democratically-owned and controlled institutions are best able to serve all segments of a community, including people of modest means. It is incredible that the regulator of credit unions, the NCUA, eliminated a democratic process, the CAP, for considering how credit unions can better adhere to their mission of serving people of modest means. This is also a body blow to fair lending, and diminishes the commitment of credit unions to adhere to the Fair Housing Act and the Equal Credit Opportunity Act." NCRC's lawsuit questions the agency's adherence to the Administrative Procedures Act and not the substance of CAP. "NCRC unfortunately has some fundamental misunderstandings about credit unions," Becker countered. NAFCU Board members were angry and felt it necessary to respond to NCRC's "misstatements" following an article on Credit Union Times Web site. NCRC, in its statement, brought up the argument that credit unions can no longer use the excuse of being geographically or occupationally confined, as more credit unions become community chartered. "First, it should be clear that unlike banks, credit unions do not serve the general public," Becker responded. "How can one criticize a credit union for failing to serve a population that isn't in its field of membership?" On the other hand, he commented, denial rates for credit unions serving predominantly minority populations might appear `alarmingly high' because nearly all the applicants were minorities. Becker also noted that credit unions have taken advantage of recent changes in the law, permitting federal credit unions to add `underserved areas' to their fields of membership (FOMs). Over the two and a half years since the change, they have added over 350 underserved areas, including 19 million individual potential members. In fact, in NAFCU's analysis of the Home Mortgage Disclosure Act (HMDA) data, the same data that NCRC based its study on, credit unions consistently perform better than banks and thrifts on loans to low-income and minority people. Becker pointed out that the HMDA data showed credit unions approving 84% of all mortgage applicants with incomes of $40,000 or less in 2000. Banks and thrifts scored only 62% and 72%, respectively. Of minorities with incomes of $40,000 or less. Credit unions approved 70% of applicants, whereas banks approved just 56% and thrifts just 63%. Becker also highlighted credit unions' records of "higher quality of service and at less cost." However, NCRC found in its study in partnership with the Woodstock Institute that over a two-year period credit unions consistently lagged behind all lenders in home purchase loans to minority and low-and moderate-income (LMI) borrowers, as well as to residents of minority and LMI neighborhoods. When NCRC expanded its study to include all single-family loans it found that CRA-covered lenders issued 32% of their loans to LMI borrowers in 2000, while credit unions issued only 24% of their loans to LMI borrowers. To Becker, CAP is unnecessary for obvious reasons. "Why would a successful credit union take the time and go to the expense of adopting an underserved area unless they intended to serve it?" he asked. "The answer is, they wouldn't. Credit unions that seek to add an underserved area to their FOM do so out of a genuine desire to extend their services into communities neglected by the banking industry." NCRC argued that taxpayers are subsidizing the credit union industry while banks and thrifts pay taxes and therefore owe the public the information produced by the CAP. "Any fair minded person would assume as a minimum requirement for the privilege of the American taxpayers carrying this part of the lending industry, that credit unions would have no hesitations embracing CAP or any other initiatives that ensured greater credit union access for consumers of all income levels," NCRC's Taylor said. Becker suggested that the NCRC "should work with credit unions and refrain from spreading misinformation about the credit union community's exemplary record in serving low-income and minority Americans." [email protected]</p>