WASHINGTON–Another bill has been introduced in Congress that would place credit unions under the Community Reinvestment Act (CRA).
As CUToday.info earlier reported here, the House American Housing and Economic Mobility Act (H.R. 7262) was introduced in the House by Rep. Cedric Richmond (D-LA) as companion legislation to a similar bill introduced in the Senate by Sen. Elizabeth Warren (D-MA). The sponsors of both bills say the objective is to reduce rent costs and provide greater access to home ownership through first-time homebuyer payment assistance.
But the House version also includes the CRA compliance provision and is being met with objection from CUNA, which said the bill would “ultimately harm credit unions.”
“CUNA believes extending the CRA to credit unions would represent a significant step backward in achieving expanded access to affordable mortgage credit and other financial services from reputable cooperative entities like credit unions,” the association said.
In a letter to Richmond and other members of Congress, CUNA cited recent data showing credit unions deliver more than $15 billion in benefit to all consumers each year in the form of lower rates on lending and higher dividends on deposits. It also demonstrated how credit unions increased lending to low- and moderate-income mortgage borrowers by 48%, while bank lending over the same time period to low- and moderate- income borrowers decreased by 56%, according to CUNA.
“CRA is intended to encourage for-profit banks to meet the needs of borrowers in their communities, including in low- and moderate-income neighborhoods,” said CUNA. “Congress passed this law in 1977 to reduce discriminatory lending practices against low-income neighborhoods. Credit unions’ consumer-focused model is self-regulating, which supports the rationale that credit unions are not covered by CRA.”