Defense Credit Union Council Letter on Harper's CRA Efforts

Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC

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Hello, this is Samantha Shares. This episode covers The Defense Credit Union Council’s letter to N C U A’s Chairman Todd Harper regarding his support for imposing Community Reinvestment Act on credit unions.

The following is an audio version of that advisory and the press release. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.

And now the letter.

October 15, 2024 Chairman Todd M. 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 “redlining” 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 “redlining” 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 members’ 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., “redlining”) 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 nation’s defense and military communities.

Sincerely,

Jason Stverak

Chief Advocacy Officer D C U C

This concludes the Letter

If your Credit union could use assistance with your exam, reach out to Mark Treichel on LinkedIn, or at mark Treichel dot com. This is Samantha Shares and we Thank you for listening.

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