WASHINGTON–Senator Elizabeth Warren (D-WA) has introduced legislation that would require credit unions to be examined for compliance under the Community Reinvestment Act (CRA), drawing immediate pushback from the credit union trade groups.
According to Warren, the goal of the legislation–the American Housing and Economic Mobility Act–is to tackle the crisis around affordable housing in the country and to lower the costs of homes in some neighborhoods.
The bill would provide $500 billion over 10 years for affordable housing programs and would be funded by raising the estate tax to levels that were in place during the George W. Bush Administration.
Analysts say the bill has no chance of passing the current Congress, which is under the control of Republicans, but could be resurrected in the next Congress should Democrats win majorities in the mid-term elections.
CUNA's Response
In a statement, CUNA said the proposed bill would ultimately harm America’s credit unions, stating that over the past 40 years, Congress has considered whether CRA should apply to credit unions, and consistently maintained the determination that such application is not only unnecessary, but counter-intuitive given the member-owned nature of credit unions.
“Credit unions have not and do not engage in the discriminatory lending activity that prompted Congress 40 years ago to enact the Community Reinvestment Act,” said CUNA President Jim Nussle in a statement. “Therefore, it makes no sense to subject them to the type of punitive requirements that banks with a history of redlining must follow. Credit unions are not-for-profit, member-owned financial institutions who deliver $15 billion in benefit to consumers every year. Make no mistake: this bill would jeopardize this benefit and the ability for credit unions to serve their members. It will make it more difficult for low and moderate-income borrowers to access credit from credit unions.”
CUNA went on to state the argument that CRA should apply to credit unions has been largely driven by Wall Street banks, in an “effort to undermine the credit union tax status, and ultimately, eliminate the credit union charter as a form of banking competition. Placing credit unions under CRA would also increase regulatory requirements, causing the National Credit Union Administration to increase its staff and resources for examination.”
CUNA said it would “implore” Congress to consider the nature of credit unions to ensure CUs are not included under any CRA provisions.
Warren’s home state of Massachusetts currently requires credit unions to abide by CRA rules.