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The National Federation of Community Development Credit Unions has reiterated its long-standing policy of opposing the imposition of the Community Reinvestment Act on credit unions.The National Federation restated its opposition after H.R. 1479, the Community Reinvestment Modernization Act, was introduced into the House of Representatives. The bill would extend CRA to mortgage banks, financial holding companies, insurance companies, securities companies and so-called “mainstream” credit unions.The bill would exempt credit unions designated as low-income and most, if not all, community development credit unions. Even though most National Federation member CUs would not be affected, the association said, “We believe that adding CRA to the compliance costs faced by credit unions may, in fact, have the unintended consequence of decreasing credit union investment in low-income communities. It may divert resources and focus to compliance instead of maintaining or expanding the voluntary investments that credit unions have made, and are increasingly making.”The National Federation pointed out that the damage credit unions are taking from the current economic situation does not stem from their own bad loans or risky lending practices but from the economic troubles of other financial organization impacting their members.“In California, Florida and other areas where the crisis is most acute, credit unions have suffered losses not because of loans they made, but because of the collateral damage inflicted by other financial institutions,” the National Federation noted.

Peter Westerman

Credit Union Times

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