WASHINGTON - The banking industry is backing a government plan to impose Community Reinvestment Act-like requirements on credit unions.

However, credit unions and Senate Banking Committee Chairman Phil Gramm oppose the idea.

The plan, unveiled in June by the National Credit Union Administration, would require that applications to expand, convert, or charter a community-based credit union include a "community action plan" detailing how the institution would serve its community. It is part of a proposal designed to revamp chartering and membership rules.

In comment letters, banking groups argued that the NCUA is being too lenient.

The American Bankers Association urged the agency to require all credit unions to comply.

"The community action plan should be applied to all federal credit unions regardless of their common bond or community structure," wrote Edward L. Yingling, the banker association's executive director.

America's Community Bankers regulatory counsel Charlotte Bahin said community-based credit unions are not serving their communities now. "When a credit union or group of credit unions wishes to become a community credit union, they take on additional responsibilities … and it has not been our experience that large community credit unions do that," she said in an interview.

But Fred Becker, president and chief executive officer of the National Association of Federal Credit Unions, argued that such a requirement is "unnecessary." Applying it only to community-based institutions "would serve to divide credit unions," he wrote.

Sen. Gramm sent a letter to the credit union administration's chairman, Norman D'Amours, complaining that community action plans are "in direct opposition to action taken by Congress" when it rejected CRA-like provisions in the Credit Union Membership Access Act of 1998.

In its comment letter, the Credit Union National Association agreed that the credit union administration lacks the authority to adopt this proposal. "Neither the express language of the Federal Credit Union Act nor its legislative history authorizes the agency to issue a Community Reinvestment Act/CAP [community action plan] proposal," the association's president and chief executive officer, Daniel A. Mica, wrote.

The banking industry also said that the NCUA would defy congressional intent with a plan to speed approvals of affiliated groups with less than 500 members; today only groups with 200 members or less can take advantage of the streamlined process.


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