Treasury Publishes Feedback from CRA Roundtable Discussions

The Federal Reserve last week published a summary of feedback from various stakeholder roundtable discussions on ways to modernize the Community Reinvestment Act (CRA), Perspectives from Main Street: Stakeholder Feedback on Modernizing the Community Reinvestment Act. CUNA and the state leagues have strongly opposed extending CRA to credit unions.

The CRA was enacted in 1977 because some banks were found to be “redlining,” or discriminating against some communities by accepting their deposits but not lending those deposits back to the community. Because credit unions are member-owned, not-for-profit, financial cooperatives that serve defined fields of membership, they are structurally are unable to “redline” or discriminate against their members and therefore should not be subject to the CRA.

The Fed held roundtables on the issue between October 2018 and January 2019. Not surprisingly, many bankers and community stakeholders said they would like the CRA to be expanded to credit unions, as well as other financial services sector players such as insurance and fintech companies.

CUNA and the state leagues consistently work to set the record straight on the differences between credit unions and banks as the banking industry continues to lobby to have their requirements relaxed while at the same time trying to have those requirements extended to credit unions.

A Treasury report last year offered recommendations to modernize the CRA though it did not recommend extending CRA to credit unions.