Removing Barriers Blog

CUNA Writes to Senator Warren and Entire Senate in Opposition to Section 203 of S. 3503, the American Housing and Economic Mobility Act of 2018
Posted October 03, 2018 by CUNA Advocacy

At the end of September, Senator Elizabeth Warren (D-MA) introduced S. 3503, the American Housing and Economic Mobility Act, which seeks to enhance housing opportunities for traditionally underserved groups and create economic incentives for local governments to eliminate unnecessary land use restrictions. While CUNA agrees with much of the bill’s intent, the legislation would counterproductively harm credit unions by adding an unnecessary layer of examination compliance.

While S. 3503 has a laudable goal, its provision to extend the Community Reinvestment Act (CRA) to credit unions runs counter to the goal of increasing access to credit. Earlier today, CUNA wrote a letter to Senator Warren and a separate letter to all US Senators opposing Section 203 that would expand the reach of the CRA to credit unions.

The CRA was enacted in 1977 to combat discriminatory bank lending practices. Since it was enacted, Wall Street banks have fought to include credit unions, despite a complete lack of evidence of systematic lending discrimination.

As currently written, Senator Warren’s legislation seeks to impose CRA requirements, which were enacted as a result of bank redlining and disproportionate discriminatory lending practices—explicitly not intended to apply toward credit unions, who by definition, serve their community as a cooperative non-profit entity.

In the letter to the Senate CUNA wrote, “In fact, because credit unions are restricted by statute and regulation in the field of membership they may serve, and generally can only lend to their member-depositors, it is impossible for credit unions even to engage in the kind of diversion of depositor resources that led to the enactment of the CRA in the first place.”

Also included in the letter was information highlighting the fact that placing credit unions under the CRA would impact their ability to lend.

“Credit unions have a great number of champions in Congress with longstanding relationships with credit unions in their states and districts and who recognize that credit unions have a statutory mission to promote thrift and provide access to credit for provident purposes. We must assume these champions would prefer to see more credit unions lending to their constituents alongside large banks and non-bank entities.

We share and support this goal wholeheartedly. The problem is that extending the CRA to credit unions would represents a significant step backward in achieving expanded access to affordable mortgage credit and other financial services from reputable cooperative entities like credit unions.”

In addition to the two letters, CUNA Chief Advocacy Officer Ryan Donovan also wrote an op-ed in The Hill, detailing the many ways subjecting credit unions to the CRA would hamper access to credit.

On behalf of America’s credit unions and their 110 million members, CUNA will continue to work with the Senate to ensure they understand why subjecting credit unions to the CRA is unnecessary and counterproductive.