WASHINGTON—Banking regulators expect to issue a formal proposal to modernize the Community Reinvestment Act (CRA) in the coming months, said FDIC Chairman Jelena McWilliams this week.
McWilliams further indicated the FDIC, Office of the Comptroller of the Currency (OCC) and Federal Reserve will pursue a joint rulemaking on small-dollar lending.
The CRA was enacted in 1977 in response to so-called “redlining,” or the practice not making loans in certain areas. Credit unions are exempt from compliance with CRA, although CUs in Massachusetts must comply with state CRA rules
Since enactment of CRA, the banking industry has consistently lobbied Congress to have credit unions brought under the law.
“The banking industry continues to lobby to have their requirements relaxed while trying to put the requirements on credit unions. NAFCU has strongly opposed extending CRA regulations to credit unions and will continue to advocate against additional constraints on credit unions,” the trade association said.
‘Not Engaged in Illegal Activities’
NAFCU added it has repeatedly highlighted that credit unions “have not engaged in the illegal and discriminatory practices of banks, including redlining, because credit unions were established to offer provident credit to any member in their field of membership and therefore should not be subject to the CRA.”
A Treasury report last year offered recommendations to modernize the CRA; credit unions remained exempt in that report.
The CFPB is currently considering proposals to delay the implementation date of its payday lending rule until 2020 and remove mandatory underwriting requirements.