WASHINGTON–CUToday.info has learned Sen. Elizabeth Warren (D-MA) intends to propose legislation aimed at making housing more affordable and ending housing discrimination, with provisions that would also add a host of new Community Reinvestment Act-like requirements for certain federal credit unions, including around mergers.
The proposed American Housing and Mobility Act of 2024, which has not yet been introduced and could see revisions, calls for, among other things, downpayment assistance programs for first-time homebuyers, grants to communities that have an “appraisal gap,” efforts to “strengthen” the Community Reinvestment Act (in Warren’s home state of Massachusetts, state-chartered CUs must comply with CRA), and housing loan guarantees to certain veterans.
It further seeks to reform a host of estate taxes and add a surcharge on high income estates and trusts.
In a section of amendments related to credit union service to underserved areas, the bill would amend the Federal Credit Union Act and redefine the term “underserved area" and add tests for compliance with the CRA-like rules, including a system for grading certain fedeal credit unions according to how they are meeting the needs of underserved communities. proposes limits be placed on those FCUs that have low grades.
While the legislation has not been introduced in the Senate by Warren, it is already being discussed by many in Washington representing credit unions, which can be expected to strongly oppose such a bill.
“Credit unions have an exemplary record of member service to stand on. This is why Congress has not seen fit to impose punitive CRA requirements on them, and there’s no reason to do so now," said Tony Hernandez, president and CEO of the Defense Credit Union Council. “The member-centric structure of credit unions is the right model to insure that consumers are treated fairly.”
The Proposals
For federal credit unions with more than 100,000 members, the bill proposes to:
- Require additional reporting to NCUA at least annually that would “monitor adherence by a covered federal credit union to a significant unmet needs plan…that describes how the covered federal credit union will serve the deposit and financial needs of the community”
- Require NCUA to assess the record of the credit union in meeting the credit and other financial needs of its entire community, in particular low- and moderate-income people and communities
- Require NCUA to assess the effectiveness of the CU in meeting the retail lending needs of the community, including originating loans to support affordable housing
- Subject CUs to tests to be developed that would measure the effectiveness of community development investments
- Provide grants to CDFIs for housing-related initiatives
Rules Around Mergers
The bill would also require in cases of an application for merger, acquisition or the conversion of a charter to consider quantitative measures related to the issues addressed above, and require the opportunity for public comment for at least 60 days.
Approvals of merger applications would require credit unions to demonstrate how the combination is in the public interest, with merger plans needing to include a community benefits plan and demonstration of the ability to accomplish the plan.
Public Hearings Would be Held
Credit unions that have “need to improve” or “low satisfactory grades would be subjected to public hearings before any merger could proceed.
The proposed bill says that any failure by a federal credit union to meet the requirements at the end of a 24-month period shall have their merger application terminated.
The proposed bill includes additional language outlining other requirements in support of its aim of boosting homeownership and service to low-income communities.
Annual Report to be Required
It also requires NCUA, to publish an annual report around how credit unions are meeting “unmet needs.”
For credit unions with community charters, the bill requires more reporting around how the CU is meeting the needs of the various groups within its field of membership.
The version of the bill reviewed by CUToday.info is 154 pages long. It is not known when the bill might be introduced.
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