Dems Delete Credit Union CRA Provision in Reintroduced Housing Bill

Saying they’ve decided that credit unions shouldn’t be subject to the Community Reinvestment Act after all, key House and Senate Democrats on Wednesday announced they are reintroducing legislation intended to provide up to 3.2 million new housing units for low and middle-income families.

The change in the bill led CUNA to immediately endorse the plan being spearheaded by Sen. Elizabeth Warren (D-Mass.) and two other Democrats in the Senate and by Rep. Cedric Richmond (D-La.) and 14 other Democrats in the House.

Warren and Richmond first introduced the legislation in the last Congress; at the time, it would have made credit unions subject to the Community Reinvestment Act.

After it was introduced, officials from the Maryland/DC Credit Union League, the Louisiana Credit Union League and the Cooperative Credit Union League held a meeting with Warren, Richmond and Rep. Elijah Cummings (D-Md.), another cosponsor, Maryland/DC league President/CEO John Bratsakis, told CU Times.

“We wanted to work with them in a constructive way,” he added. “We got all three offices in one room.”

The result was the amended bill, he said.

Congress enacted the reinvestment act 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.

The Treasury Department last 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 has suggested that the law be expanded to include non-banks, including credit unions.

Banks have argued that credit unions should be subject to the CRA, but credit unions have argued that their mission is the same as the CRA’s, so such a requirement is not needed.

The Democratic housing bill would attempt to control the cost of rent or purchasing a home by building up to 3.2 million new housing units. It also would create incentives for local governments to eliminate unnecessary land-use requirements and provide assistance to people hurt by other federal policy failures.

It also would make more non-bank mortgage companies subject to the CRA.

In a letter endorsing the bill, CUNA President/CEO Jim Nussle wrote that the bill “is an important effort to improve access to the housing market for members of all communities and, in the process, properly recognizes the distinctions that exist between credit unions and banks when meeting community needs.”

Nussle said that CUNA and the state credit union league worked with Warren to try to convince her to drop the credit union-CRA provision.