WASHINGTON – Several key witnesses at next weeks’ hearing on the Community Reinvestment Act will be calling on Congress to pass legislation expanding CRA to include credit unions.
Among those expected to testify at Wednesday’s hearing in front of the House Financial Services Committee are representatives of the American Bankers Association and the National Community Reinvestment Coalition, both of which have urged passage of the bill, and the Massachusetts Banking Commissioner, which oversees its own state’s CRA, one of just two that covers credit unions.
Credit union representatives have not been invited to testify.
The National Community Reinvestment Coalition, which issued a report critical of credit unions’ service to the underserved this week, will urge Congress to expand the CRA to include all financial services providers, according to David Berenbaum, executive vice president of the non-profit. "We hope that CRA modernization is part of the overall effort at regulatory reform, something we think will help rebuild confidence in the marketplace," Berenbaum told The Credit Union Journal yesterday.
The CRA was enacted in 1977 in response to findings that banks were engaging in "redlining," that is, delineating certain unprofitable low-income neighborhoods and limiting services there. The law requires that banks and thrifts make concerted efforts to provide services and loans in low-income areas.
A bill introduced in the House earlier this year would expand the CRA to credit unions, insurers and mortgage companies and it would judge compliance with CRA by determining how an entity serves racial minorities, as well as the poor.
The bill would require that each credit union submit a plan to NCUA on how it plans to provide services to minority and low- and moderate-income neighborhoods within their fields of membership. NCUA, which would assess each credit union’s compliance with their own plans every two years, would be able to use compliance in deciding whether to grant requests to change charters, expand FOMs, merge or relocate branches.
