WASHINGTON–Credit unions would not be required to comply with the Community Reinvestment Act (CRA) as part of a new bill introduced by Sen. Elizabeth Warren (D-MA) in Congress.
The legislation is an updated version of the American Housing and Mobility Act that was introduced in the previous Congress. According to CUNA, Warren had initially planned to expand the CRA rules to include credit unions, but instead the bill’s language codifies the existing NCUA regulations for how credit unions serve underserved communities.
In a statement, Warren said the legislation will “help bring down costs for renters and buyers, level the playing field so working families everywhere can find a decent place to live at a decent price, and takes the first step to address the effects of decades of housing discrimination on communities of color.”
Warren said an analysis by non-partisan Moody's Analytics found the bill would lead to the rehabilitation of more than three-million housing units over the next decade and “fully close the current gap between affordable housing demand and supply; create 1.5 million new jobs at its peak impact; bring down rents for lower-income and middle-class families by 10% -- saving families an average of $100 per month -- and produce no long-term deficit impact.”
In response to the bill’s introduction, CUNA CEO Jim Nussle said, “We're thankful to Senator Warren for recognizing the many ways that credit unions support underserved communities, and for providing a path to codifying the regulations that have guided our movement for over two decades. We look forward to collaborating with her and other allies of the credit union movement to solidify the good work that credit unions are doing to uplift communities that are too often ignored and underserved by banks and other financial institutions.”
CUNA said in a statement “Congress has considered whether the CRA should apply to credit unions, consistently maintained the determination that such application is not only unnecessary, but counter-intuitive given the member-owned nature of credit unions.”
CUNA further said it worked with Warren to show the many ways that credit unions have been fulfilling requirements to support underserved communities for well over two decades.
CUNA sent a letter of support for the 2019 American Housing and Economic Mobility Act.
"We thank Senator Warren for updating her legislation to no longer subject credit unions to CRA regulations, which were designed to prevent banks from engage in discriminatory lending practices," said NAFCU EVP/General Counsel Carrie Hunt. "Additionally, we appreciate that the bill seeks to allow all types of credit unions to add underserved areas to their fields of membership. However, we have concerns about the new regulatory and examination burdens that would be placed on credit unions that add underserved areas. While the bill makes improvements over the previous version, NAFCU continues to have concerns about some of the language as we want to ensure that credit unions that want to assist communities that other institutions have left behind are not subject to new CRA-like regulations, just under a different name."
Financing the Bill
Warren said to offset the cost of the legislation, it includes language that returns the estate tax thresholds to their levels at the end of the George W. Bush administration and institutes more progressive rates above those thresholds. “These changes will affect only about 14,000 of the wealthiest families in the country,” Warren said.
Other Provisions of Bill
According to a statement from Warren, the American Housing and Economic Mobility Act will:
- Control the cost of renting or buying a home by leveraging federal funding to build up to 3.2 million new housing units for lower-income and middle-class families.
- Reduce the cost of housing across America by creating incentives for local governments to eliminate unnecessary land use restrictions that drive up costs. The bill puts $10 billion into a new competitive grant program that communities can use to build infrastructure, parks, roads, or schools. To be eligible, local governments must reform land use rules that restrict production of new affordable housing.
- Provide assistance to people hurt by federal housing policy failures through two targeted new programs:
- Down payment assistance to communities historically denied mortgages by the government. The federal government denied Black borrowers mortgage subsidies as late as the 1960s, stripping them of opportunities to build wealth. As a first step to address the resulting wealth gap between white and Black families, the bill provides down payment grants to first-time homebuyers living in formerly redlined or officially segregated areas.
- Support for families whose housing wealth was destroyed by the financial crisis. The bill invests $2 billion to support borrowers with negative equity on their mortgages, predominantly in suburban and rural communities.
- Hold financial institutions accountable for providing access to credit for all Americans. The bill would strengthen obligations under the Community Reinvestment Act (CRA) to provide credit to low- and moderate-income communities by extending the law to cover more non-bank mortgage companies, promote investment in activities that help poor and moderate-income communities, and strengthen sanctions against institutions that fail to follow the rules, reads a statement from Warren.
- Promote mobility by strengthening anti-discrimination laws and improving the housing voucher program. The bill prohibits housing discrimination based on sexual orientation, gender identity, marital status, veteran status, and source of income. The bill also makes it easier to use housing vouchers in neighborhoods with good schools and good jobs and allows tribal housing authorities to administer their own voucher programs.
The bill’s cosponsors in the Senate include Sen. Kirsten Gillibrand (D-NY) and Sen.Edward Markey (D-MA.), and in the House Reps. Cedric Richmond (D-LA), Barbara Lee (D-CA), Gwen Moore (D-WI), Elijah Cummings (D-MD), Mark Pocan (D-WI), Ayanna Pressley (D-MA), Rashida Tlaib (D-MI), Susan Wild (D-PA.), Eleanor Holmes Norton (D-DC), Steve Cohen (D-TN), Jamie Raskin (D-MD), Ro Khanna (D-CA), Joe Kennedy III (D-MA), and Suzanne Bonamici (D-OR).