The Government Accountability Office (GAO) is recommending that the Community Reinvestment Act (CRA) be expanded to nonbanks, including credit unions.
The report noted that stakeholders requested that CRA be applied to mainstream credit unions. Advocates believed that subjecting credit unions to CRA would bolster their branching and lending to low-and moderate-income communities. GAO pointed out that National Community Reinvestment Coalition found that during the Great Recession credit unions were more apt to retreat from modest-income neighborhoods than banks, because credit unions are not subject to CRA, while banks are.
GAO further noted that a think tank discussion group recommended that credit unions should be brought under CRA-like regulations. Discussants thought it would make sense for credit unions to perform CRA-like duties in return for maintaining their charters or designations as community development financial institutions.
However, a participant in the nonfederal bank regulator discussion group thought it was unnecessary to expand CRA to credit unions, because credit unions are already owned by their members and play a vital role in their communities.
Other recommendations made by the GAO included revising the lending and service tests and expanding assessment areas.
These recommendations were forwarded to the Department of the Treasury, which is planning to review how CRA is being implemented.
The report was requested by Senator Elizabeth Warren (D - MA) and Representative Elijah Cummings (D - MD).
Read the report.
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