Bankers Call for Credit Unions to Be Added to CRA
Earlier this year, the GAO suggested that the law be expanded to include non-banks, including credit unions.
Federal policymakers should require credit unions to follow the same Community Reinvestment Act standards as banks follow, the American Bankers Association has told the Office of the Comptroller of the Currency.
In a comment letter submitted in response to an OCC request on how to update the Community Reinvestment Act, the bankers said that one of the goals of the Federal Credit Union Act and the justification for the credit union tax exemption is a requirement that credit unions make credit available to people of “modest means”
However, the bankers said, there is no requirement that credit unions document their services to those people.
“The requirements to meet the financial services needs of all income demographics, including [low- and moderate-income people] individuals, should apply to all federally insured depository institutions,” the bankers said.
The OCC would not have the power to add credit unions to the law by itself.
Congress passed the CRA in 1977, as part of an effort to encourage banks to meet the credit needs of their communities, including low- and moderate-income communities. Federal banking regulators enforce the law by conducting examinations. In 1995, the law was tailored in an effort to account for different sizes and business models.
Policymakers have been struggling with how to update the Community Reinvestment Act.
The Treasury Department earlier this year issued recommendations on how to update the law; that document did not recommend adding credit unions to the law.
However, the Government Accountability Office had suggested that the law be expanded to include non-banks, including credit unions.
And Sen. Elizabeth Warren (D-Mass.) has introduced a housing bill that would do the same.
Credit union trade groups have argued that adding them to the law is not necessary because credit unions by design have the same goals as the Community Reinvestment Act.
“Instead of attempting to misinform lawmakers and American consumers with works of fiction, banks should concern themselves with cleaning up their own backyard,” said NAFCU President/CEO B. Dan Berger. “Banks have been caught red-handed refusing loans to particular consumers based solely on their ZIP code and socioeconomic background.”