While the American Housing and Economic Mobility Act of 2018 (S. 3503) has a laudable goal, its provision to extend the Community Reinvestment Act (CRA) to credit unions runs counter to the goal of increasing access to credit. CUNA President/CEO Jim Nussle wrote to all 100 Senators Wednesday to oppose the section in S. 3503 that would expand the reach of the CRA to credit unions, including to Sen. Elizabeth Warren (D-Mass.), the bill’s sponsor.
The CRA was enacted in 1977 to combat discriminatory bank lending practices. Nussle noted in his letter that since it was enacted, Wall Street banks have fought to include credit unions, despite a complete lack of evidence of systematic lending discrimination.
“In fact, because credit unions are restricted by statute and regulation in the field of membership they may serve, and generally can only lend to their member-depositors, it is impossible for credit unions even to engage in the kind of diversion of depositor resources that led to the enactment of the CRA in the first place,” Nussle wrote.
Nussle also said that placing credit unions under the CRA would impact their ability to lend.
“Credit unions have a great number of champions in Congress with longstanding relationships with credit unions in their states and districts and who recognize that credit unions have a statutory mission to promote thrift and provide access to credit for provident purposes,” Nussle wrote. “We must assume these champions would prefer to see more credit unions lending to their constituents alongside large banks and non-bank entities.
We share and support this goal wholeheartedly. The problem is that extending the CRA to credit unions would represents a significant step backward in achieving expanded access to affordable mortgage credit and other financial services from reputable cooperative entities like credit unions,” he added.
CUNA Chief Advocacy Officer Ryan Donovan wrote an op-ed in The Hill Wednesday, detailing the many ways subjecting credit unions to the CRA would hamper access to credit. CUNA sent a copy of the op-ed to the Senators Wednesday as well.