WASHINGTON-While credit unions have until now fended off efforts to bring them under the Community Reinvestment Act before, a bill introduced in the House is expected to pose a much bigger obstacle.
That's because not only has Rep. John Conyers, the chairman of the critical House Judiciary Committee, signed on a co-sponsor of the bill, but it is said to have the support of House Financial Services Committee Chairman Barney Frank. The CRA has also been praised by many leaders of the Democratic Party, which now controls both chambers of Congress.
And while Frank has not signed on to the bill, the Massachusetts Democrat has long expressed support for CRA. He often points to state charters in his state, one of two states (Connecticut is the other) that has a CRA for credit unions. "He's told us that before," said one credit union lobbyist, acknowledging the growing possibility of a CRA for credit unions.
The bill introduced in the House would extend the banking law to mainstream credit unions (low-income credit unions would be exempt), mortgage companies and insurers and would apply strict new requirements, including that institutions lend to racial minorities in addition to poorer communities in order to comply with the law.
"The Community Reinvestment Act has a long record of benefitting low- and middle-income neighborhoods and the banks and thrifts that lend in those neighborhoods," Rep. Eddie Bernice Johnson, D-Texas, said at a press conference to announce the legislation she co-authored with Conyers, D-Mich.
Under the new bill, NCUA would be required to develop and monitor for compliance with the standards aimed at measuring service to minorities, as well as low- and moderate-income neighborhoods. NCUA could use non-compliance or subpar performance as a basis to reject charter requests, such as mergers, field of membership expansions or branch additions.
The new bill would not apply to more than 1,000 credit unions that are designated as low-income by NCUA, which are already presumed to be attending to lesser affluent communities.
Credit unions have fought extension of CRA to them since the 1977 enactment of the law, arguing it was passed in order to require banks to address findings of so-called redlining, when poorer communities were ignored in favor of wealthier markets. But some lawmakers say the vast expansion of credit unions, especially those authorized to serve entire communities, makes it imperative that they also be induced to provide equal service to all portions of the fields of membership.
