WASHINGTON – At least one community activist will ask Congress during hearings today on the Community Reinvestment Act to expand CRA to include credit unions.
The head of the National Community Reinvestment Coalition, which has been critical of credit unions’ service to the underserved, will urge members of the House Financial Services Committee to include a credit union provision in CRA reform legislation expected later this year. “We think it will be appropriate to apply CRA to very large credit unions,” Jesse Van Tol, spokesman for the group, told The Credit Union Journal yesterday.
The community group issued a report in 2005 concluding credit unions lag behind banks and thrifts in serving minorities, women, and low-income communities and individuals. The report urged Congress to bring credit unions under CRA.
There is a growing consensus in Congress to expand CRA to certain financial entities not currently covered, including credit unions and insurance companies. The major credit union lobby groups, CUNA and NAFCU, oppose any effort to apply CRA to credit unions.
The CRA was enacted in 1977 to ensure banks and thrifts that were taking deposits from certain inner city and low-income communities also were providing services to those communities. Under CRA, banks and thrifts are required to illustrate their service to the communities they are in and their service is monitored by federal regulators.
State chartered credit unions in one state, Massachusetts, already are subject to the state’s own CRA, and there has been little criticism from Bay State credit unions. Problematically for credit unions in the rest of the country, Massachusetts is where Rep. Barney Frank, the chairman of the Financial Services Committee and a proponent of expanding CRA, comes from.
