NAFCU Says CUNA-Supported Housing Bill Increases Regulatory Burden

NAFCU says the legislation imposes new requirements for CUs, adding them to the Federal Credit Union Act rather than the CRA.

An American flag flies outside the Capitol building in Washington, D.C., U.S. Photographer: Al Drago/Bloomberg

Signaling a significant split in the credit union community, NAFCU officials said Thursday that a Democratic housing bill endorsed by CUNA adds layers of regulations that credit unions would have to follow.

“We have huge concerns because a huge other regulatory regime [is] created,” said Carrie Hunt, NAFCU’s executive vice president of government affairs and general counsel.

CUNA this week endorsed the plan introduced 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.

Carrie Hunt

CUNA officials said they could support the housing bill, which they opposed last year, because the Democrats deleted provisions that would require credit unions to comply with the Community Reinvestment Act.

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.

But Hunt said the legislation imposes new requirements for credit unions—adding them to the Federal Credit Union Act, rather than the CRA.

The legislation would impose new reporting provisions for credit unions that serve underserved areas and attempt to fill needs that are not met by other financial institutions.

Hunt said the legislation would allow the NCUA to terminate a credit union’s charter if it did not comply with its plan to serve those needs.

“These are CRA-like requirements, but they’re being added to the [Federal Credit Union Act],” Hunt said. “This looks like CRA for credit unions.”

The bill also would provide for a public hearing for certain credit unions that attempt to fill unmet needs.

“We fear that bankers are going to use this for their own political purposes,” Hunt said.

“Bankers in states have been pushing for public hearings on credit union charters,” added Brad Thaler, NAFCU’s vice president of legislative affairs.

The Democratic housing bill also 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.