WASHINGTON—America’s Credit Unions has responded to comments made by Rep. Emanuel Cleaver (D-MO) during last week’s House Financial Services Committee hearing regarding credit unions and redlining, an issue that appears to be gaining interest among members of Congress, Washington insiders report.
As CUToday.info reported, during the HFSC hearing on oversight of prudential regulators, Cleaver said he is concerned about redlining practices at the $1.9-billion
Citadel FCU and $181-billion Navy FCU. Cleaver pointed out Navy is larger than some banks and should be placed under the Community Reinvestment Act (CRA).
In ACU’s letter to Cleaver, President and CEO Jim Nussle stated the trade group strongly opposes placing CRA requirements on credit unions.
“As many in Congress have wisely noted, if all financial institutions acted like credit unions, there would be no need for the CRA. We firmly believe that placing CRA requirements on credit unions would create new costly regulatory burdens without public benefit—a solution in search of a problem,” Nussle wrote. “This could lead to such changes having the impact of actually reducing access to credit for those in vulnerable communities.”
Nussle added that credit unions agree more must be done to promote access to financial services and end discriminatory practices, but “banking representatives have traditionally opposed efforts for credit unions to expand in underserved areas and even have previously sued the NCUA to prevent more credit unions from adding underserved areas.”
As CUToday.info has also reported, in May Cleaver quizzed CFPB Director Rohit Chopra on whether Navy FCU should be subject to CRA.
During last week’s hearing, Cleaver was clear to NCUA Chairman Todd Harper about his concerns regarding alleged redlining practices at NAVY FCU.
“My concern is Navy Federal is the nation's largest credit union. In fact, it's larger than many of the big banks. They have 13 million, or 13.2 million members, and 180 something billion dollars in assets,” Cleaver stated. “And it has been clear in terms of investigations, that they have discriminated through redlining. And that was a statement from our Justice Department. And they have, with great intentionality, refused to serve Black and Hispanic neighborhoods. And, and they are doing so seemingly with some protection, I'm assuming.”
More Than Discrimination
Cleaver, during the hearing, added he’s concerned with more than discrimination.
“I think the discrimination is obvious, every report showed that they did. In fact, the numbers don't lie they discriminated against Black and Brown citizens,” Cleaver told Harper. “But they're getting away with it. And one of the things I'm concerned about is, as you know, they're not involved with CRA. And maybe they ought to be subject to the same requirements as the banks, of which they are, in many cases, larger. What say you?”
Harper responded, stating, “With respect to the size of Navy Federal Credit Union, if you looked at the size of institutions, they would be the 25th-largest institution in this country. Currently, Congress has exempted federal credit unions from the Community Reinvestment Act. Overall, there are a number of states that have adopted rules recently, including those in Illinois and New York to apply them. There are four other states that also have CRA that applies to credit unions. If Congress were to move forward on CRA and applying it to credit unions, I would ask for flexibility given there are many different types of federal credit union charters.”
Cleaver agreed there should be guidelines.
“I'm talking about the largest credit unions, and there should be some cutoff point,” Cleaver said. “This is a thorny issue. And it places all of us in a bit of a pickle, but the larger credit unions, like Navy Federal, should be required to participate in CRA. That's what I'm saying.”
“Understood,” responded Harper. “And that's ultimately the decision that Congress needs to make. I can't make that as a regulator, but what we can do within
our existing authorities is to apply fair lending laws and examine for fair lending laws. And in recent years, we've increased the amount of resources dedicated to fair lending to conduct more exams at larger financial institutions.”
Cleaver asked Harper if he knew of any policies that have impacted the conduct of Navy Federal.
“I'm sorry, my understanding is nothing has happened,” Harper said.
“I mean, they discriminated, the records are clear…,” Cleaver said.
Harper concluded by telling Cleaver NCUA has joined with the CFPB in supervision of these matters for institutions above $10 billion.
“It's a supervisory matter currently under review. I'm unable to comment on it,” Harper said.