GOLDSBORO, N.C. — After years of successfully staving off Community Reinvestment Act (CRA) regs for credit unions, there is growing concern that push may finally come to shove on this issue now that Democrats hold both the House and the White House.
In Massachusetts, state-chartered CUs already must comply with CRA. The question for all other CUs is what to do now, and what might a world of CRA mean?
House Judiciary Committee Chair John Conyers (D-MI) has introduced a bill that would extend CRA to "mainstream" credit unions but exempt low-income CUs. Though House Financial Services Chair Barney Frank (D-MA) has yet to officially sign on as a co-sponsor for the bill, he has long favored CRA for CUs nationwide, pointing to the fact that CUs in his home state already are required to comply with similar state legislation. With two important committee chairmen potentially backing such a move, some CUs are concerned the bill will be passed.
"For the first time, I do believe there is a possibility," said Robert McKenzie, CEO of North Carolina Community FCU in Goldsboro, N.C.
Gregory Meyer, community relations manager for Meriwest CU in San Jose, Calif., agreed that the chances of CRA being imposed on credit unions is now likely. "Judging by the way the current financial and political winds are blowing, it's a fair assumption that CRA will be imposed upon credit unions," he said. "For years, certain members of Congress and advocacy organizations have pushed to have CRA cover credit unions along with other financial market entities. I would not be surprised to see this put into law by the end of this year."
McKenzie doesn't expect it to be as strict as the CRA many CU leaders fear. "There will be some amendments that would soften the blow to credit unions," he said.
However, even with amendments, McKenzie said it's hard to see how CRA would work for different credit unions. "The problem is the one-size-fits-all mentality," he said. "It's exempt for community development credit unions and credit unions with 3,000 members or less. But what about credit unions with 3,001 members? Larger credit unions have made a decision to bring the credit union mission to an entire community. How does one describe a small credit union compared to a large credit union?"
"I guess the biggest problem I have with it is it's really not necessary," McKenzie continued. "We really don't need any more regulations coming down on us. The average credit union is doing what it is supposed to be doing. The last thing we need is to spend money is to update our software to comply with CRA requirements. There's a limited amount of resources available to credit unions. I just don't think this proposed legislation has been well thought out. From a practical point, it's going to do a lot more harm than good."
