NAFCU defends CUs, hits bankers back with truth about CRA
Urging Congress not to listen to the misinformation being spread by bank lobbyists regarding the Community Reinvestment Act (CRA), NAFCU President and CEO Dan Berger reiterated Friday why this law applies to banks and provided valid reasoning – already acknowledged by Congress and regulators – as to why it does not apply to credit unions.
Berger noted that the CRA was adopted as a punitive measure on banks due to discriminatory practices such as redlining and disinvestment. "Given the behaviors of many banks that led to the 2008 financial crisis, and even the recent scandals such as those at Wells Fargo, it is apparent that banks have not learned their lesson and that is why we believe that the CRA still has a role to play for banks today," he wrote to House Financial Services Committee Chairman Jeb Hensarling, R-Texas, and Ranking Member Maxine Waters, D-Calif.
Furthermore, Berger encouraged the lawmakers to take a second look at reinstating a modernized Glass-Steagall Act and regulators' attempts to loosen Volcker rule requirements on big banks.
Noting why credit unions are not under the CRA requirements – a position understood and affirmed by the Treasury Department and lawmakers – Berger explained that credit unions have not engaged in the illegal and discriminatory practices of banks. Also, "credit unions are inherently invested in their communities, operating unlike other depository institutions with a not-for-profit cooperative structure and a common bond membership."
He backed up his letter to lawmakers Friday stating that "Credit unions exist to serve the people in their communities, including millions of low- and middle-income households in need of affordable loans and safe and sound financial products. Banks have been caught red-handed refusing loans to particular consumers based solely on their zip code and socioeconomic background. Additionally, they have been subject to a seemingly endless stream of billion dollar fines – roughly $174 billion ... Washington policymakers should reject bank lobbyists' attempts to deflect attention onto financial institutions that are not the bad actors."
Berger's letter and remarks came after the American Bankers Association, in a recent comment letter to the Office of the Comptroller of the Currency (OCC), called for credit unions to be subject to the CRA as the regulator takes another look at the law.
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