CUNA strongly opposes a bill introduced this week by Sen. Elizabeth Warren (D-Mass.) that would require credit unions to be examined for compliance with the Community Reinvestment Act (CRA). Congress exempted credit unions from the CRA when it was enacted in 1977, determining it would be unnecessary and counter-intuitive for it to apply to member-owned financial cooperatives.
“Credit unions have not and do not engage in the discriminatory lending activity that prompted Congress 40 years ago to enact the Community Reinvestment Act. Therefore, it makes no sense to subject them to the type of punitive requirements that banks with a history of redlining must follow,” said President/CEO Jim Nussle. “Credit unions are not-for-profit, member-owned financial institutions who deliver $15 billion in benefit to consumers every year. Make no mistake: this bill would jeopardize this benefit and the ability for credit unions to serve their members. It will make it more difficult for low and moderate-income borrowers to access credit from credit unions.”
CUNA believes this is an effort spearheaded by Wall Street banks as part of a greater effort to ultimately undermine the credit union tax status.
A recent CUNA white paper shows that, due to their low risk profile, credit unions increased their lending during the financial crisis, even as banked pulled back from the same markets.
From June 2007—just prior to the onset of the financial crisis — to December 2017, small business loans at credit unions more than doubled, growing by over 128.3 percent or an average of 11.7 percent per year. By contrast, these loans at banks grew only 6.2 percent (or 0.6 percent per year).