New Orleans

The next shoe to fall is going to hurt more.

A preliminary report I reviewed from A Community Voice, the membership community organization in Louisiana (www.acommunityvoice.com) of the results of their extensive data crunching of HMDA (Home Mortgage Disclosure Act) data on lending for 2009 (the most recent year available) reveal a significant return of racial discrimination in lending across impacting all minority segments.  The A Community Voice should be available in March, so we will see what conclusions they draw, but the early indications are deeply disturbing and were revealed in a hearing before a Department of Justice hearing in the Lower 9^th Ward of New Orleans last night. I’m not sure where else the data is being reviewed or released, since this used to be an annual project of ACORN at least when I was there, but we should all keep our eyes out for these numbers.  They will not be pretty.

The much maligned Community Reinvestment Act (CRA) blamed so roundly and falsely by the right and Republicans as a whipping dog for the housing crash and the Great Recession for supposedly moving loans to the poor, was more appropriately characterized in a story in today’s Times.

“The C.R.A. has been a financial Maginot Line – weakly defended and quickly overrun,” said Raymond H. Brescia, a professor at Albany Law School.  What’s more, Mr. Brescia said, while closing branches violates the spirit of the law, if not the letter, he could not recall a single example in which a bank was cited by regulators under the C.R.A. for branch closures in recent years.  “The C.R.A. leaves banks a lot of leeway,” he said, “and regulators have not wielded their power with much force.”

And, frankly, Professor Brescia is guilty of understatement if anything.  Lending discrimination never really left, as he points out, but at least it receded and there were efforts made and lip service spent.

Given the huge setbacks in homeownership by minorities due to the recession, this should be a battleground widely engaged to attempt to recapture this ground, hold and extend the line again, but it will only be so, if we have the capacity and commitment to reengage banks and push back again with whatever weak tools we still are allowed.  If not, no army of “Elizabeth Warrens’ can prevent the implosion of payday lending, predatory financial institutions preying on the poor and moderate income families across the land.

New Orleans

The central change in the bill is to extend the reach of the CRA requirements barring racial discrimination in mortgage lending to many of the financial institutions that have grown up in recent years and are unregulated by the Federal Reserve and do not have federally insured deposits.  One of the great ironies of the right wing blame-game around the housing meltdown of the current Great Recession has been to try to exonerate Wall Street and other get-rich-quick tactics and blame CRA for having “forced” institutions to write mortgages for homeowners unable to pay.  The truth which Johnson’s bill understands is that only about 25% of the mortgages being written at the time of the meltdown were by institutions that were in fact covered by CRA!  Most of the sub-primes for example that fueled much of the mess were totally outside of the CRA coverage.  On the conservative side of the fence, Mike Volpe who writes the Provocateur blog, is one of the few voices on the right who seems to understand that fact.  [Incidentally, some of the pundits and bloggers mistakenly claim that Countrywide was outside of CRA coverage – it was not, since Countrywide was also chartered as a bank.]

We need to bring all of these fast dealers under CRA obligations.  Many understand this.  Remember that H&R Block when trying to start a national bank voluntarily was willing to meet CRA non-discriminatory requirements (and won a charter), while Wal-Mart when trying to start a national, Utah based “industrial” bank was not willing to guarantee it would abide by CRA non-discrimination standards (and failed to win a charter.)

Johnson’s bill would bring all the non-depository institutions that are now (or will again?) write mortgages under the CRA including credit unions, insurance companies, and mortgage banks.

All such lenders would have to buckle up, disclose data so that there lending policies, procedures and impacts were clear, and therefore prove that their underwriting does not discriminate.  God knows they might even someday have to establish that they actually serve the needs of the community, rather than just their investors, but that’s a star I’ll keep wishing on.

Johnson has 60 sponsors, and as a member of the House Financial Services Committee, I’m hopeful that she will get Chairman Barney Frank to set a hearing on this bill and let it begin its progress into law.

We need to protect the CRA and extend its reach, and this bill is an important step in that direction.

More details are in the bill: Community Reinvestment Modernization Act of 2009 (H.R. 1479).

Easthampton, MA

I was wrong!  This was a tribal meeting of the faithful at the Log Cabin Restaurant where a sellout crowd that was surely 300 and perhaps 500 largely older and virtually all white folks crammed in to hear the gospel.  Barney gave them a good show starting with his joke about being there with his partner and not liking the fact that he was often pilloried as a member of a discriminated against group:  “partisan Democrats!”  They howled.  I jotted down a number of his one-liners in my program and then got out of Massachusetts without them, so I’ll save that for another day.

What interested me most as a barometer of the times was how he glossed over some issues and handled questions on others.  I was interested in how he was going to advance or defend the President to the faithful here.  All of this is particularly important because despite the relish he enjoys from his persona as an outside, Frank is right on the inside of all in dealing with all of the financial issues in the current meltdown.

He mentioned CRA several times and correctly argued that low and moderate income non-discriminatory lending was not a factor in the housing meltdown, which was especially interesting given yet another claim in the Wall Street Journal that day by a former government official.  In his discussion of his hopes for some financial reforms in the future he didn’t mention having left CRA out of the package even as the Administration had proposed including the measure under financial consumer protection, which still seems best.  In dealing with the limited and lame measures to solve the foreclosure crises, he mentioned the failure to amend the bankruptcy standards as a disappointment without any insight or confession for the faithful on how bank lobbyists had managed this unique trick in thwarting all stated Congressional intentions even while collecting a gazillion dollars in bailout monies.  There’s a story here and it probably isn’t pretty, but it didn’t fit in a one-liner, so he counted on the fact that no one much was following the trail on that problem.  The reforms he was proposing for the future were actually modest and drew only lukewarm applause.

When the question period finally arrived, almost all of the questions, some quite pointed were about the health care issue.  One fellow asked why we couldn’t get “Medicare for all,” and Frank saw that’s going to probably take “more years than you or I have left.”  Surprisingly, Frank was somewhat flatfooted on most of these questions, essentially saying that he was so busy on finance issues that he wasn’t as knowledgeable on these core concerns.

He was most unsettled when a well coifed woman asked a pointed question that implicitly insinuated that he and other Congressional representatives were getting a special deal on their insurance coverage.  First, he tried to interrupt her, but she stubbornly insisted on finishing her question for whatever reason and backed him down.  Then he answered that he was on Medicare and the federal government insurance identical to 3 million other federal employees, and though a great plan was not a special entitlement for the 500 odd elected representatives.  He took some shots at not believing what was on the internet, and then for some reason repeated the same answer again including the defense, hardly needed among this adoring crowd, of the emergency clinic that was on the grounds and that they all paid an extra $500 or so to support.  It was clear he was not used to these questions, didn’t like these questions, and for all his gruff and bluff, was as uncomfortable in the new polarized polity, as the rest of us are.  Clearly the Congressmen for all of his bluff and bluster has gotten accustomed to being a character and outsider among the Wall Street and Washington crowd that daily traipses into his office, but is still trying to get a better grip at what is really happening on the grassroots.

He was whisked from the podium to the press conference.  As he walked by us it was interesting to see how unlike the typical Boston area pol he seemed to be.  He wasn’t working the crowd.   He had given me a hello walking into the Log Cabin when we passed each other in the hallway, but watching him pass by here without shaking hands right and left was unusual.

Congressman Frank seemed an outsider here even among the faithful and an insider and defender of Washington, the Federal Reserve, and Wall Street.  You figure?

Dauphine Island

Yippee, yi-ky-yay!  Thank god!

As Phyllis Salowe-Kaye, Executive Director, New Jersey Citizen Action recently wrote in the Star-Ledger:

“The CFPA proposed by the president would have broad institutional oversight of enforcement responsibilities for the wide range of financial consumer protection laws already in place, including CRA, and bolsters the chances of passage of the Community Reinvestment Modernization Act of 2009…This law would strengthen CRA as it is applied to banks and expand CRA’s reach to non-bank financial institutions. There is a critical need to have independent mortgage companies and other non-bank lenders subject to the same rules as banks. Quite simply, if you are doing the same business, you should be subject to the same rules.”

Amen!!  This is a big fight worth our time and energy even in these days and times when we are pushed between pillar and post fighting other big-ticket issues.

In New Orleans in the post-Katrina we learned a lot about house gutting.  We ran crews of workers and volunteers into homes to pull out all of the guts of the house down to the studs so that it could be rebuild.  From the outside it looked like a house.  From the inside it looked like a house skeleton.

The banks and other financial fast dealers are already acting like house gutters around CRA and the new CFPA.  House Financial Services Committee Chair Barney Frank (D-Mass) actually introduced the bill about a month ago without moving CRA under the new regime instead leaving it at the mercy of the current procedures.  This won’t work.  We have endured decades of dilution and watched one tooth after another being pulled from the CRA protections to the point CRA was often simply gumming banks while 70% of home mortgages before the crises were being loaned outside of CRA regulations.

There are some peoples’ heroes on that Committee like Maxine Waters (D-CA) and Al Green, our friend from Houston.  These committees are huge so there are a lot of friends and some folks who boycotting the census, so a little of everything.

We need to reach out for them now while it is on our minds and demand that they stand up to the big money lobbyists and put CRA in the Consumer Financial Protection Agency where it belongs and can finally do its job again.  When this financial catastrophe eases up, our people are going to need houses and be hard pressed to buy them without a CRA with real teeth and muscle.

Reach out to these folks now and put CRA under the CFPA where it can do some good:

Majority Members

• Barney Frank, Chairman, Massachusetts
• Paul E. Kanjorski, Pennsylvania
• Maxine Waters, California
• Carolyn B. Maloney, New York
• Luis Gutierrez, Illinois
• Nydia Velázquez, New York
• Mel Watt, North Carolina
• Gary Ackerman, New York
• Brad Sherman, California
• Gregory W. Meeks, New York
• Dennis Moore, Kansas
• Michael Capuano, Massachusetts
• Ruben Hinojosa, Texas
• William Clay, Jr., Missouri
• Carolyn McCarthy, New York
• Joe Baca, California
• Stephen Lynch, Massachusetts
• Brad Miller, North Carolina
• David Scott, Georgia
• Al Green, Texas
• Emanuel Cleaver, Missouri
• Melissa Bean, Illinois
• Gwen Moore, Wisconsin
• Paul Hodes, New Hampshire
• Keith Ellison, Minnesota
• Ron Klein, Florida
• Charlie Wilson, Ohio
• Ed Perlmutter, Colorado
• Joe Donnelly, Indiana
• Bill Foster, Illinois
• André Carson, Indiana
• Jackie Speier, California
• Travis Childers, Mississippi
• Walt Minnick, Idaho
• John Adler, New Jersey
• Mary Jo Kilroy, Ohio
• Steve Driehaus, Ohio
• Suzanne Kosmas, Florida
• Alan Grayson, Florida
• Jim Himes, Connecticut
• Gary Peters, Michigan
• Dan Maffei, New York

Minority Members

• Spencer Bachus, Ranking Member, Alabama
• Michael N. Castle, Delaware
• Peter T. King, New York
• Ed Royce, California
• Frank Lucas, Oklahoma
• Ron Paul, Texas
• Steve LaTourette, Ohio
• Donald A. Manzullo, Illinois
• Walter B. Jones, North Carolina
• Judy Biggert, Illinois
• Gary Miller, California
• Shelley Moore Capito, West Virginia
• Jeb Hensarling, Texas
• Scott Garrett, New Jersey
• J. Gresham Barrett, South Carolina
• Jim Gerlach, Pennsylvania
• Randy Neugebauer, Texas
• Tom Price, Georgia
• Patrick McHenry, North Carolina
• John Campbell, California
• Adam Putnam, Florida
• Michele Bachmann, Minnesota
• Kenny Marchant, Texas
• Thaddeus McCotter, Michigan
• Kevin McCarthy, California
• Bill Posey, Florida
• Lynn Jenkins, Kansas
• Christopher Lee, New York
• Erik Paulsen, Minnesota
• Leonard Lance, New Jersey