Ron Paul Dear Colleague on Credit Union bill
Ron Paul Dear Colleague on Credit Union bill
March 9. 1998
(J. Bradley Jansen was Ron Paul’s legislative staffer for these issues at this time)
Why Fix it if it Ain’t Broke!
Credit Unions Already Provide Community Reinvestment
March 9, 1998
Dear Colleague,
Let’s not “compromise” Credit Unions’ ability to provide community reinvestment.
Credit Unions have successfully promoted community development since their inception without being exposed to community reinvestment regulations.
The Community Reinvestment Act passed in 1977 without so much as a hearing in the House of Representatives. CRA carried a noble purpose: to end discrimination by banks. The bill focused on a perceived credit exploitation, whereby money was taken from the community in the form of deposits, but lent to borrowers outside of the community. However, banks offer an invaluable service to these communities by safeguarding deposits and offering interest regardless of where a loan is made.
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CRA is the most burdensome banking regulation. The annual cost for complying with just 13 of the many federal regulations community banks face was $3.2 billion in 1993, according to a 1993 study by the Independent Bankers Association of America. This is a staggering 24% of net income before taxes to comply with a fraction of the rules that govern the banking industry.
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CRA compliance imposes costs on community banks of approximately $1 billion and approximately 14.4 million employee hours. All of these costs are money and manpower diverted form the cause of community development. A community bank has a natural interest in the well being of the market that it serves.
Protect credit unions from new taxes and burdensome banking regulations.
To cosponsor HR 1121, call Bradley at 5-2831.
Sincerely,
Ron Paul