Magazine article American Banker

Rep. Kennedy: Industry Should Come under CRA

Magazine article American Banker

Rep. Kennedy: Industry Should Come under CRA

Article excerpt

WASHINGTON Changes in the industry and poor showings in Home Mortgage Disclosure Act data justify applying CRA to credit unions, Rep. Joseph P. Kennedy 2d said in an interview Tuesday.

Rep. Kennedy will explore extending the Community Reinvestment Act to credit unions in a hearing next week. His inquiry is a rare challenge of the credit union industry, which wields a lot of power on Capitol Hill.

"This issue needs to be delved into by Congress," the Massachusetts Democrat said. "And unless they get voluntary cooperation, Congress may have to enact legislation."

The hearing will be held Thursday by the House Banking subcommittee on consumer credit and insurance, which Rep. Kennedy heads. Representatives of banking and credit union trade groups will testify at the hearing.

"This is the first time this issue has been discussed for quite a while, and I don't expect it will be the last," said David John, a lobbyist for the National Association of Federal Credit Unions. "We could find ourselves facing an extended inquiry."

Jeanne-Marie Murphy, a lobbyist for the Credit Union National Association, said it was essential for the credit unions to make a tough stand in what could be the first battle of a long war.

"We need to establish a real strong hearing record," she said. Credit unions argue that they shouldn't be subject to CRA because by lending only to their members they are fulfilling the intent of the law.

Rep. Kennedy said that argument was justifiable in the past but may now be open to question.

"When credit unions were very small organizations ... the argument that they were already accomplishing the goals of CRA made sense," he said.

Now credit unions are larger and have wider membership bases, and "with that comes a responsibility to meet the needs of the local community," he said. State-chartered credit unions in Massachusetts comply with a state CRA-type law. …

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