There should be a “level playing field” when it comes to credit unions being subject to Community Reinvestment Act requirements, CFPB Director Rohit Chopra said today during a hearing of the House Financial Services Committee. The federal government currently does not include credit unions in the Community Reinvestment Act, though several states impose CRA-like regulations on those institutions (the CFPB issued a summary of state-level CRA laws last fall).
Chopra, who was testifying as part of the bureau’s semiannual report to Congress, was asked by Rep. Emanuel Cleaver (D-Mo.) about the difference in regulatory status, noting that banks have been “demanding” that credit unions be subject to CRA-like requirements for as long as he’s been in Congress—20 years.
“We have seen many states enact CRA for certain nonbanks … many of those institutions that are not banks are getting a lot of direct or indirect benefits, and we should really see if a more level playing field is appropriate,” Chopra said. “The majority of mortgage lending is now outside of banks and so we should really look hard, whether by Congress or continue by the states.” Chopra added that while banks may not always agree with the CFPB, this is an area where “they would also agree that we should have stronger CRA requirements for other mortgage lenders that enjoy those benefits.”
ABA has continued to advocate for this change, noting that many credit unions have grown into large financial institutions that receive significant government benefits to serve low-to-moderate income individuals though they are not required to demonstrate that they are meeting their service obligations to their communities. Recent purchases of community banks by credit unions demonstrate the need for CRA expansion, ABA has said, noting that community banks pay taxes and are CRA compliant, but once the transaction closes, the acquiring credit union has no CRA responsibility.
