Dems push expanded Community Reinvestment Act; deny Act's role in mortgage meltdown; GOP cites ACORN connection
By: Byron YorkChief Political Correspondent09/16/09 4:13 PM EDT
A number of experts believe that aggressive enforcement of the 1970s-era Community Reinvestment Act contributed to the mortgage meltdown, and thus to the greater financial crisis, by requiring financial institutions to lend to unqualified borrowers. Now, the Democratic majority in the House of Representatives is responding to that situation by proposing to expand the scope and power of the Community Reinvestment Act.
This morning House Financial Services Committee chairman Rep. Barney Frank held a hearing on H.R. 1479, the "Community Reinvestment Modernization Act of 2009." The bill's purpose is "to close the wealth gap in the United States" by increasing "home ownership and small business ownership for low- and moderate-income borrowers and persons of color." It would extend CRA's strict lending requirements to non-bank institutions like credit unions, insurance companies, and mortgage lenders. It would also make CRA more explicitly race-based by requiring CRA standards to be applied to minorities, regardless of income, going beyond earlier requirements that applied solely to low- and moderate-income areas.
Republicans on the committee strongly oppose the plan. "Instead of looking to expand the number of institutions that must abide by Community Investment Act regulations," California Rep. Ed Royce said in prepared opening remarks at today's hearing, "I think we should reassess the role this and other government mandates played in the financial collapse and consider scaling it back."
In private conversation, other Republicans were more emphatic. "There is clearly arguable evidence that the CRA is at the root of this financial meltdown," says one GOP committee member. "So what do they do? They try to expand CRA."
But Democrats, led by H.R. 1479 sponsor Rep. Eddie Bernice Johnson, claimed that expansion of CRA is much-needed. "Congress has passed a number of laws designed to combat redlining and eliminate housing discrimination," Johnson said at the hearing. "Unfortunately, we all know that redlining still occurs."
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Greed and low-doc, no-doc loans to unqualified borrowers by unregulated brokers did more to start the forclosure wave than anything else. Blaming CRA is a way to cover up the true irresponsible parties. How quickly we forget the not-so-long-ago times when a woman or minority couldn't get a loan and banks took deposits from communities where they wouldn't do residential or commercial lending.
ReplyDeleteI think that well-run local banks that focused on good lending rather than greed are doing just fine with their portfolios. They used prudent underwriting and still got good CRA reviews and did plenty of good for the community.
Can anyone recall that it was Barney Frank and his fellow travelers that precipitated the financial crises by refusing to regulate freddie mac and fannie mae?
ReplyDeleteHere he goes again !
You can't fix stupid and the Dem leadership is just that.Stupid.. and too cowardly to take any responsibilty for thie role in the financial mess we find ourselves in.They are despicable and incompetent.
ReplyDeleteThey have learned nothing...do they really expect the American people to fall for this charade?
ReplyDeleteShameless.