The American Housing and Economic Mobility Act was reintroduced by Senator Elizabeth Warren on July 29th, without any additional CRA requirements for credit unions, much to the relief of credit unions and to the dismay of opposition. America’s Credit Unions, who had been against such additions, and had advocated fiercely for their omission, praised the move.
“While America’s Credit Unions has concerns with the American Housing and Economic Mobility Act, we commend Senator Warren’s desire for housing reform in our country,” said America’s Credit Unions President/CEO Jim Nussle. “We thank her for keeping Community Reinvestment Act language out of this bill, and understanding how these additional regulatory and financial burdens would create difficulties for credit unions as well as the 140 million Americans they serve.”
“Today’s news is a culmination of incredible coordination within the industry to successfully tell the story of credit unions fulfilling their fundamental duties of serving the underserved. As banks continue to chase profits, close their doors, and leave communities behind, credit unions will always hold themselves to a higher standard, and it’s clear that lawmakers understand and appreciate the credit union difference,” added Nussle. “This is a win for our industry, but the work continues until every American can live their best financial lives by choosing to trust credit unions.”
Reform regarding the Community Investment Act (CRA) has long been a source of contention between credit unions and banks, akin to the longstanding feud over credit unions’ tax-exempt status. Banks argue that as many credit unions are reaching nationwide growth and billions in assets, they should be subject to the same regulations as other financial institutions.
The American Banker’s Association recently pointed to a lack of said regulations as a contributor in the Navy Federal case, stating that if the credit union had been subject to oversight and review under CRA, the discrepancy and racial disparity in its lending practices would have been uncovered long before, calling it a “canary in a fair lending coal mine.”
Credit unions, however, are staunchly against this idea, noting that their restriction in lending due to field of membership requirements would make any such regulations an unfair burden. Additionally, they argue, since credit unions are not-for-profit institutions committed to their communities and serving the underserved, there is little need for federal regulation on the matter.
“Banks need to be told to do the right thing. Credit unions do it naturally,” says America’s Credit Union’s Fast Facts sheet on CRA.
While credit unions should celebrate the win, it’s unlikely that the opposition will allow the issue to be laid to rest entirely, and we may see more discussion on the topic or attempts to expand the regulation in the next few years.
