Sen. Elizabeth Warren’s (D-Mass.) proposal to place credit unions under the Community Reinvestment Act would be a step backward in access to affordable mortgage credit, CUNA Chief Advocacy Officer Ryan Donovan wrote in The Hill Wednesday. Donovan’s op-ed was written in response to Warren’s bill that contains a provision placing credit unions under the CRA.
While CUNA supports Warren’s likely goal of increasing access to credit for low and moderate-income borrowers, Donovan notes that there has never been any evidence that credit unions engaged in lending discrimination. It was such discrimination from the banks that led to enactment of the CRA in 1977.
“In fairness, Senator Warren’s motive and those of the for-profit banking industry are probably very different. It is no secret that the banks would like to see credit unions eliminated from the market altogether, and they have long supported extending CRA to credit unions as one of several steps toward that end,” Donovan wrote. “Senator Warren, on the other hand, has longstanding relationships with credit unions in her state, and supported expanding credit unions’ ability to extend mortgage credit for non-owner occupied residential properties.
“We must assume, therefore, that she would prefer credit unions lending to her constituents, as opposed to large banks and non-bank entities. We share and support this goal wholeheartedly,” he adds. “The problem is that her solution, at least as it relates to extending the CRA to credit unions, represents a step backward in achieving additional access to affordable mortgage credit from reputable cooperative lenders like credit unions.”
Donovan went on to note that applying the same standards to banks and credit unions is not only “unfairly punative” to credit unions, but is counterproductive to Warren’s goals.
“Any policymaker interested in achieving more credit union lending, as we honestly believe Senator Warren does, should support eliminating statutory and regulatory barriers that limit access to credit unions as opposed to erecting new barriers that will be cheered by the banks and non-bank lenders she has fought so long to contain,” Donovan wrote. “Applying the exact same standards imposed to remedy bad bank behavior is not only unfairly punitive to credit unions, which by their very structure cannot engage in the very practices the CRA was designed to prohibit, it is counterproductive to the very end that we believe Senator Warren seeks to achieve.”