ALEXANDRIA, Va. – Credit union executives are criticizing a component of NCUA’s proposal on community charter fields of membership as the agency’s own bid to enact a Community Reinvestment Act-like rule for large community charters.
The provision to closely monitor a community charter convert for adherence to plans to market to low-income communities, suggested Barry Jolette, president of San Mateo CU in a comment letter submitted on the proposed rule, "appears more as a Community Reinvestment Act type requirement of the banking industry.
"This particular section mirrors the Community Reinvestment Act of the banking industry," wrote Herbert Hoosman, president of Vantage CU, who said the proposal could make the federal charter option less attractive for state charters such as his.
"Although there will always seem to be a likelihood that Congress could elect to bring credit unions under the Community Reinvestment Act, there has always been a reluctance among credit unions to see their federal regulator move into this arena absent a mandate from Congress to do so," wrote J. David Osborn, president of Anheuser-Busch Employees CU. "The fear is that the community service evaluation will be subjective, the expectations will be unreasonable and the results could be used to lower CAMEL ratings, deny branching plans, restrict service offerings, delay waiver approvals, etc.”
The concept of a CRA for credit unions has always been an anathema for credit union executives – right up there with federal tax exemption. Credit unions have been lobbying Congressional efforts to bring them under CRA for years, and oppose the issue so much they convinced NCUA to repeal its own CRA-like rule that would have required special reporting for all community chartered credit unions.
Anheuser-Busch’s Osborn said he worries that the CRA-type provision in the proposed rule might be expanded from new "federal community chartered credit unions to existing federal community charters to eventually all larger asset federal credit unions."
The provision states that a portion of the application for community charter includes detailed marketing plans for a three-year period. It also authorizes NCUA to access the execution of the plan and to set administrative actions if NCUA is not satisfied.
