Marble Falls       Almost fifty years ago, Congress passed the Community Reinvestment Act or CRA seeking to close the door on bank and lender redlining and open up the prospects for homeownership for millions of lower income families.  ACORN used Home Mortgage Disclosure Act (HMDA) data and the CRA to negotiation agreements with banks that made billions of dollars available to borrowers.  Our direct agreements enabled almost six-million families to buy homes.  Similar agreements by other community-based organizations likely move the total closer to twenty-million.  Arguably, these acts have been one of the most successful measures ever passed by Congress to create wealth for lower income families through homeownership.

There’s a problem though, and it has been a big one.  Banks and their trade associations, even while claiming to abide by the law and not discriminate, have always bridled at the regulations and any accountability on their lending.  This has allowed persistent attempts to erode the protections of the act and to allow banks to avoid oversight and regulations.

Predictably in the age of Trump, recently the FDIC, Federal Deposit Insurance Commission, and the OCC, Office of the Comptroller of the Currency, have requested public comment on new proposed regulations.  Importantly, the Federal Reserve did not join in their proposal and by the act, it is the Federal Reserve that supervises CRA and any breeches of the law.  It’s hard to see anything positive in the proposal.  The only justification seems to be the banks beating on the drum of deregulation and claiming that they are unable to keep the numbers and file the reports on their borrowers.

The proposal aims to raise bank asset size thresholds to one-billion, exempts more institutions from data reporting, and narrows exam focus to lending.  From their press release, it seems that only banks with $10-billion in assets would continue to have to provide the full range of data.  Narrowing the focus to simple lending also relieves banks from being involved in community development where they operate and reduces any commitment to facilitate homeownership or affordable housing.

There’s a long list of adverse impacts of this proposal.  Advocates suspect that this is an effort to also litigate issues so that the courts can further gut the CRA.  Estimates on the size requirements alone take more than 400 banks out of separate evaluations of their branch activity and more than 800 would no longer have any evaluation of their community development efforts.  In Louisiana, for example, where more than 60 banks are now evaluated on this matrix, the number would plummet to only 32.  Embedded in the OCC/FDIC proposal is also the prospect that they aren’t finished and would prefer to have the full package of oversight based on $30 billion, not even the $10 billion they are proposing now.

The fact that the Federal Reserve is not party to this may be our best, though fragile, hope in blocking the evisceration of the CRA.  At many levels, the claim that banks don’t want to collect this data on their lending falls apart on simple common sense.  Every bank to simply stay in business keeps and maintains data on all of their loans from A to Z.  This whole effort is simply about them not having governmental regulators review the data to assure there is no discrimination or obligations of banks to serve the communities where they are collecting deposits.

It should almost be a universal rule that what is good for banks is bad for the rest of us.  Gutting CRA is a return to the redlining 50’s.  Every effort needs to be made to block this attempt to kill the Act.