SAN JOSE, Calif. — For years, the credit union battle cry against CRA has been that CUs already do a good job of serving the underserved, but "doing a good job" might not be good enough.
"Luckily for Meriwest Credit Union, we have been altering our community relations and community development work to be more in line with CRA," said Gregory Meyer, Meriwest's community relations manager. "We have become members of the Federal Home Loan Bank of San Francisco and participate in their Affordable Housing Grant program for community development. We have successfully sponsored grants for our local Silicon Valley Habitat for Humanity affiliate and for the Old Pueblo Community Foundation in Tucson, Ariz., where we have two financial centers."
The problem, he said, is CRA isn't just about meeting the law's requirements-it's also about documenting and reporting exactly how the credit union is doing that. "For Meriwest, the primary change would be the reporting aspect of the work we are performing in the community," Meyer explained. "I am confident that the programs we have put into place and the results we have achieved so far would fit well within the guidelines of CRA."
Adding that one aspect of reporting may bring a lot of new work for many CUs, Meyer noted. "The reporting piece can be a serious issue for some credit unions," he said. "I can see where some credit unions will need additional training on gathering the specific data the auditors want to see, setting up continuous tracking, and how to present the data."
Meriwest CU would have to "carefully consider" each program it is asked to sponsor if CRA is imposed, Meyer said, as there would be more emphasis on low and moderate income housing programs, small business access to capital, and financial education for low-income families. "If your biggest sponsorship is a health or human services program, you may want to rethink that," he advised. "Credit unions will need to put more strategic thought into sponsorships, volunteerism and grants. Yes, there are organizations out there that provide important services to our communities that may get the stick-end of the lollipop. If a non-profit's programs don't fit within CRA, a credit union may just make a business decision to reduce or eliminate support for it. In some ways, CRA can force some credit unions away from their traditional community partners if those partners are not eligible for CRA credit."
Meyer said that when he was in his former position as community relations director of a major national bank, he saw "community medical clinics trying to provide financial education classes to their clients just to get a piece of the CRA money pie. This way was outside their mission, but they needed the money. We will probably see more of this," he said.
