Samantha: Hello, this is Samantha Shares.
This episode covers The Defense Credit Union Councilâs letter to N C
U Aâs Chairman Todd Harper regarding his support for imposing Community
Reinvestment Act on credit unions.
The following is an audio version of that letter.
This podcast is educational and is not legal advice.
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And now the letter.
October 15, 2024 Chairman Todd Harper
National Credit Union Administration
Dear Chairman Harper,
Our members noted your recent social media posts and comments indicating support
for imposing Community Reinvestment Act (C R A) provisions on credit unions
and soliciting input on the issue.
On behalf of the Defense Credit Union Council (D C U C) and our nearly 200
members and 40 million members of defense credit unions, as well as
the entire credit union movement, we are writing to express our deep
concerns regarding the potential application of C R A to credit unions.
This decision should not be made in haste or in response to news stories about
the actions of one or two credit unions.
It would be a public policy failure to universalize the recent âredliningâ
violation of one particular credit union and apply remedies for that misdeed
into a regulatory burden that is wholly inappropriate for the member-owned
cooperative credit union industry.
Additionally, the fact that the âredliningâ finding by the Department
of Justice was uncovered without C R A being applicable to credit unions
strongly suggests that this remedy would not address whatever problem you
assert should lead to C R A for part or all of the credit union movement.
Our members take their mission seriously as not-for-profit, member-owned
cooperatives with a distinct mission to serve their members,
especially those of modest means.
This cooperative structure has always served to ensure that credit unions
are inherently focused on meeting the financial needs of their members,
unlike for-profit banks, which have external shareholders to satisfy.
Credit unions already serve low- and moderate-income individuals
and communities without the need for additional regulatory mandates.
Imposing expensive C R A requirements on credit unions is redundant and
unnecessary and eliminate the number of credit unions currently serving their
membersâ best interests along with those who are economically disadvantaged.
Data consistently shows that credit unions, including Defense Credit
Unions, have an exemplary record of providing affordable financial
services to underserved populations.
Many credit unions, particularly those serving military bases and defense
personnel, operate in areas where banking options are limited, and the financial
needs of service members are distinct.
By offering low-cost loans, financial literacy programs, and
savings products, credit unions fulfill their mission of promoting
financial inclusion and security.
Since the C R A was enacted to address the issue of discriminatory
lending practices (i.e., âredliningâ) by for-profit, shareholder-driven
banks, why punish all credit unions?
Credit unions, by definition, do not engage in the practices that
C R A was designed to combat.
The fundamental difference in structure and purpose between banks and credit
unions makes C R A an ill-fitting regulatory framework on the latter.
Plus, credit unions are already held accountable to their members,
ensuring that their activities benefit the communities they serve.
Finally, the N C U A, as the independent regulator of federally insured
credit unions, has a critical role in protecting and promoting the unique
cooperative model of credit unions.
We commend the N C U A for consistently opposing the application of C R
A to credit unions and urge the agency to continue to advocate
against any such proposals.
Particularly since credit unions are already subject to extensive regulatory
oversight and examination by the N C U A.
We strongly urge the National Credit Union Administration (N C U A) to continue
its long- standing opposition to such requirements and request a meeting
with your office and our member CEOs to discuss this issue in greater detail.
Chairman Harper, we have a shared interest in protecting and empowering
consumers, and we look forward to working constructively with you and your team
to arrive at workable solutions that improve member access and service.
Thank you for your attention to this matter and for protecting the unique role
that credit unions play in the financial services landscape, particularly for our
nationâs defense and military communities.
Sincerely,
Jason Stverak
Chief Advocacy Officer D C U C
This concludes the Letter
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