Changes

"In 1977, a [[liberal]] [[Congress]] under President [[Jimmy Carter]] established the '''Community Reinvestment Act''' (CRA) to encourage those earning low incomes to obtain mortgages." "... in 1995, President [[Bill Clinton]] - with the help of liberals in Congress - added massive new provisions to CRA that forced banks to issue $1 trillion dollars in bad loans and indirectly fund the work of radical left-wing organizations." <ref>[http://www.grasstopsusa.com/freemarketsolutions.html Your Blast Fax], ''GrasstopsUSA.com''</ref>

The '''Community Reinvestment Act''' (or '''CRA''', (Public Law 95-128), title VIII, (US Statute 91:1147), (US Code 12:2901) ''et seq.'') is a [[United States federal law]] that requires [[bank]]s and [[savings and loan association|thrift]]s to offer [[Credit (finance)|credit]] throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as "[[redlining]]." The purpose of the CRA is to provide credit, including home ownership opportunities to underserved populations and commercial loans to small businesses.

 

The CRA was passed into law by the U.S. Congress in 1977 by a [[liberal]] [[Congress]] under President [[Jimmy Carter]] to encourage those earning low incomes to obtain mortgages." Only one banker, [[Ron Grzywinski]] from [[ShoreBank]] in [[Chicago]], testified in favor of the act.   [http://www.fdic.gov/regulations/laws/rules/6500-2515.html]

[[Thomas J. DiLorenzo]] said, "The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various "neighborhood organizations," as they like to call themselves, such as [[Association of Community Organizations for Reform Now (ACORN)|"ACORN" (Association of Community Organizations for Reform Now)]]." <ref>[http://www.lewrockwell.com/dilorenzo/dilorenzo125.html The Government-Created Subprime Mortgage Meltdown], Thomas J. DiLorenzo, ''LewRockwell.com''</ref>

[[Thomas J. DiLorenzo]] said, "The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various "neighborhood organizations," as they like to call themselves, such as [[Association of Community Organizations for Reform Now (ACORN)|"ACORN" (Association of Community Organizations for Reform Now)]]." <ref>[http://www.lewrockwell.com/dilorenzo/dilorenzo125.html The Government-Created Subprime Mortgage Meltdown], Thomas J. DiLorenzo, ''LewRockwell.com''</ref>

[[Howard Husock]] wrote the following: "The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities and, as Senate Banking Committee Chairman [[Phil Gramm]] memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups..."

[[Howard Husock]] wrote the following: "The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities and, as Senate Banking Committee Chairman [[Phil Gramm]] memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups..."

"'To avoid the possibility of a denied or delayed application,' advises the NCRC in its deadpan tone, 'lending institutions have an incentive to make formal agreements with community organizations.' By intervening, even just threatening to intervene, in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city. Observes Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, which has $220 million in bank mortgage money to parcel out, "CRA is the backbone of everything we do." <ref>[http://www.city-journal.org/html/10_1_the_trillion_dollar.html The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities], Howard Husock, ''City Journal'', Winter 2000</ref>  

"'To avoid the possibility of a denied or delayed application,' advises the NCRC in its deadpan tone, 'lending institutions have an incentive to make formal agreements with community organizations.' By intervening, even just threatening to intervene, in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city. Observes Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, which has $220 million in bank mortgage money to parcel out, "CRA is the backbone of everything we do." <ref>[http://www.city-journal.org/html/10_1_the_trillion_dollar.html The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities], Howard Husock, ''City Journal'', Winter 2000</ref>  

==External Links==

==George W. Bush Administration's Proposed Changes of 2003==

*[http://www.federalreserve.gov/dcca/cra/ Federal Reserve Board: Community Reinvestment Act]

In [[2003]], the [[George W. Bush|Bush]] Administration recommended what the [[The New York Times|NY Times]] called "the most significant regulatory overhaul in the housing finance industry since the [[savings and loan crisis]] a decade ago."  <ref>{{cite web

|title=Bush Administration Attempts to tighten lending regulation|url=http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print

|publisher=The New York Times}}</ref>  The change was to place two of the primary agents guaranteeing subprime loans, [[Fannie Mae]] and [[Freddie Mac]] under supervision of a new agency created within the [[United States Department of the Treasury|Department of the Treasury]].  The changes were generally opposed along Party lines and eventually failed to happen.  Representative [[Barney Frank]](D-MA) claimed of the thrifts "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."  Representative [[Mel Watt]] (D-NC) added "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing."

 

Among banks and the regulatory agencies, there was a consensus that data collection, recordkeeping, and reporting requirements imposed a heavy burden on small community institutions.  As a result of a [[2002]] review of the CRA regulations, and revision of an initial [[Federal Deposit Insurance Corporation]] (FDIC) proposal following a public commenting period that was largely negative, the FDIC, [[Office of the Comptroller of the Currency]] (OCC) and the [[Federal Reserve Board]] (FRB), made substantive changes to the implementation of regulations for the CRA for banks (not thrifts). 

 

 

 

However, the changes were not received positively by all community groups. Changes to tests conducted on the Intermediate Small category were viewed by some as decreasing the institutions' obligations to meet lending requirements of low- and moderate-income households.  Racial inequities in [[mortgage]] acceptance rates (as reported by [[Inner City Press]], [[the National Community Reinvestment Coalition]], [[ACORN]] and other groups) are cited as a primary reason to maintain or even increase the scope of the CRA.

 

==References==

==References==

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[[Category:United States Law]]

[[Category:United States Law]]