Community Banker Asks Subcommittee to Subject Credit Unions to CRA

By David Baumann - July 13, 2022

Credit union and banking trade groups have long clashed over CUs’ inclusion in Community Reinvestment Act.


The Community Reinvestment Act (CRA) should be expanded to include credit unions, a community banker told a House subcommittee Wednesday.

“We certainly support a level playing field,” Quentin Leighty, CFO/president of the First National Bank of Las Animas in Las Animas, Colorado, told the House Consumer Protection and Financial Institutions Subcommittee. Leighty was testifying on behalf of the Independent Community Bankers of America (ICBA).

“Modern credit unions effectively operate as tax-exempt banks with near-equivalent powers,” he stated, adding, “In the absence of CRA, credit unions are unaccountable for their service to [low-and moderate-income communities] and enjoy a substantial regulatory advantage at the expense of consumers.”

Leighty also said that the problem has been exacerbated by the trend of credit unions purchasing community banks.

No member of the subcommittee addressed Leighty’s credit union comments. Congress would have to pass legislation to extend the CRA to credit unions as regulators lack the authority to do so on their own.

Background to the Community Reinvestment Act

Congress enacted the CRA in 1977; it was part of an effort to encourage banks to meet the needs of their communities, including low- and moderate-income communities. Federal banking regulators enforce the act through examinations. In 1995, the law was tailored to meet the needs of different sizes of businesses.

Democratic House members said during Wednesday’s hearing that the CRA was passed as a tool to combat redlining. They added, however, that the law has not been successful in substantially decreasing that discrimination.

The Trump Administration’s Office of the Comptroller of the Currency (OCC) issued proposed rules making changes to regulations enforcing the law. Democrats argued those rules would have had the effect of gutting the CRA.

The Biden Administration withdrew that proposal.

In May, the OCC, the Federal Reserve and the Federal Deposit Insurance Corp. issued a new proposed rule that, in part, seeks to expand credit in low- and moderate-income communities.

Credit Union and Banking Groups at Odds

Banking trade groups, including the ICBA and the American Bankers Association have long called for adding credit unions to the CRA. Credit union trade groups have opposed those plans, contending that credit unions were created to serve people of modest means. They also have argued that field of membership restrictions would skew results of a CRA exam.

Several years ago, Sen. Elizabeth Warren, D-Mass., introduced legislation intended to update the CRA, which would have made credit unions subject to the act. A subsequent bill introduced by Warren that would have updated the CRA did not include credit unions.

However, no bill updating the CRA has been enacted.

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