Tag Archives: Community Reinvestment Act (CRA)

The Billionaire and Right-Wing’s Racist Lies About Redlining

New Orleans    With the Office of the Comptroller of the Currency leading the way to gut the Community Reinvestment Act along with some other federal regulators, the last thing we should be doing is having to remind everyone, including the government and its legions of politicians, about the importance of stopping redlining of neighborhoods based on race, ethnicity, and income.  Yet, we are again forced to defend irresponsible and biased deflections from the rich, conservatives, and Wall Street as they attack fair lending standards for families seeking home ownership.  So here we go again, with feeling!

Michael Bloomberg in 2008 trying to finger the poor and minorities for the financial crisis is the equivalent of George H. Bush being mystified at the changes at the grocery store checkout counter when he was running.  What did Bush know about buying his own groceries?  Nothing.  Similarly, what does Michael Bloomberg, the newly minted Democrat, worth sixty billion dollars, living in luxury in Manhattan, know about what it might be like to try and get a loan in a regular neighborhood with a regular family wage, especially if black, yellow, or brown?  A thousand times nothing!

Most of the baloney about redlining driving the Great Recession has come from Wall Street, the securitizers, brokers, and the banking enablers looking to blame someone – anyone! – else for their fast buck, high risk greed and foolishness.  It’s not a surprise that Bloomberg sucked up that stuff, hanging around with his buddies in New York City, rather than hearing the tears and seeing the pain of families losing their homes and savings on the streets.

Robert Kuttner, writing in the Washington Post, was working at the Senate Banking Committee during 1975 when the Home Mortgage Disclosure Act was passed and 1977 when CRA was passed and therefore there at the birthing.  He points out clearly that embedded in the Act was the requirement that banks only make loans “‘consistent with the safe and sound operation of such institutions,’ which is to say with responsible lending standards.”  Senator Elizabeth Warren has been clear about where the responsibility lies as well.  She was quoted in the New York Times saying, “The end of redlining didn’t cause the 2008 crash.  Out-of-control greed by Wall Street and big banks, and the corruption that lets them control our government, caused the crash.  Predatory lenders steered families of color into the worst loans and those families lost billions.”  Kuttner also points out correctly that most of the abuses, such as the ones pointed out by Warren, also came from financial institutions that were not covered by the Community Reinvestment Act, so hardly felt “pressured,” as Bloomberg argues, to make the loans.

We need a stronger Community Reinvestment Act with broader coverage, fewer loopholes, encompassing more institutions.  We don’t need potshots at the CRA being fired off by folks looking to blame people, rather than force institutions to take responsibility and be accountable.  I’m tired of politicians, their enablers, and money men blaming us for their mistakes.


Please enjoy 1. Sam Doores – Other Side of Town.

Thanks to WAMF.

Signing of CRA in 1977

City National Bank Shows Why Some CRA Proposals are Wrong

New Orleans      There’s a big split within the federal banking establishment about what to do about revisions to the 1977 Community Reinvestment Act.  This is not your run of the mill, chest thumping, and elbow pushing in Washington over turf and regulatory jurisdiction.  It’s actually very important, particularly to low-and-moderate income families and their hopes of obtaining decent and affordable housing.

Recent reports had the Office of the Comptroller of the Currency (OCC) moving forward without agreement from the other major players, the Federal Deposit Insurance Corporation (FDIC) and, most importantly, the Federal Reserve Bank, which is the primary enforcer of the banks CRA obligations in lending.  The OCC gang wants to give banks credit for putting big dollops of dollars somewhere close to lower income neighborhoods and letting the big one-off expenditures cover their CRA requirements without focusing on family lending.  The FDIC has joined them in large part.  The Federal Reserve has finally come out foursquare against allowing the CRA score to be tilted towards big community development projects such as loans to hospitals, universities, and other claimants and in favor of maintaining an emphasis on individual lending in lower income areas for home mortgages.  The OCC/FDIC plan would also allow banks to “buy” their way out of their obligations by claiming packages of loans in rural areas and to small businesses, even where they have no operations, rather than doing the hard work of upgrading the areas that need investment where they have operations and branches.  The OCC/FDIC plan would start with the dollar amount claimed by a bank as CRA eligible, rather than breaking the loans into the key baskets for evaluation that have been the sharpest teeth left in the Act over the last more than forty years grinding it down.

Looking at the acquisition of City National Bank (CNB) in Los Angeles by the Royal Bank of Canada (RBC) is a good example of why the OCC/FDIC changes would be disastrous.  The CNB community reinvestment work had been lackluster prior to the merger discussions, and numerous groups didn’t hesitate to make that known to the Federal Reserve.  RBC finally prevailed in the acquisition largely by agreeing to make a $11 billion investment in CRA loans over a multi-year period that is now going into its final year.  ACORN requested the public file on CNB’s CRA work recently to see how they have fulfilled their commitment.  I’ll keep you out of the weeds, although we’ll invariably comeback to CNB and RBC in the future, but they are failing on their commitment pretty drastically, and with the clock running out, it’s hard to see how they would be able to pass muster without a miracle.  This is largely the case because from the numbers it appears that they have continued to not take loaning in lower income areas seriously.  They claim that they have made some big community development loans and they have purchased some community development loans.

CRA was about raising all boats in lower income neighborhoods, especially for families, and not just shoring up some remote islands to look over vast oceans of poverty starved for loans and investment.   Looking at the public file, CNB/RBC seems to be betting and believing that the OCC/FDIC proposal has already succeeded, and that there will be no consequences to their failure to live up to their loan commitment to low income families and their neighborhoods.

The OCC/FDIC proposal must be stopped or the failure of CNB/RBC will be the rule, not the exception, and once again lower income families will be left in the cold while banks preen and pretend to have served the purposes of their charters.


Please enjoy Never Enough Money by Martha Wash.

Thanks to KABF.