I thought the Community Reinvestment Act was established in 1977?
Read the WHOLE community journal article I linked. It was the CLINTON ADMIN that used the CRA to force banks to change their lending standards. You are correct it was passed in ‘77, but the radical change came about in 1999.
It was, by Carter. But it was strengthened by Clinton (looser credit standards, more oversight to “community organizer” groups like ACORN who had to “certify” that banks were giving enough loans to inner city borrowers. This, of course was just the ticket they needed to extort money from banks in order to guarentee a good compliance record.)
Carter started it in 1977. Clinton put it on steroids in the late 90’s.
The CRA was the club to extort banks in lending to losers in the name of equality and fairness.
The Husock article is the most damning piece I have ever read.
There should be a march on Washington.
Liberal government and gutless Republican oversight has led to this mess.
Clinton revised the rules and added the extortion part of the law in 1995. It went into effect in 1997.
A bit lengthy but it does give a pretty good background on the CRA - Here is the link to the .pdf
The Community Reinvestment Act (CRA) is a remarkable law. Not only does it prohibit discrimination against working class and minority neighborhoods, it also imposes an affirmative obligation on banks to serve these communities. It is not good enough for a bank to establish branches and passively wait for customers to walk into branches. Instead, banks must proactively assess community needs, conduct marketing and outreach campaigns in all communities, and consult with community stakeholders in developing financing options for affordable housing and economic development activities.
Another ingenious aspect of CRA is that it requires community participation. Banks are custodians of community wealth; thus they have an obligation to determine the credit needs of bank customers and depositors. There is no better way for banks to serve credit needs than to listen to members of the community articulate what those needs are. Thus, CRA establishes formal mechanisms for banks and regulators to seriously consider community needs and input. Members of the community can comment at any time on a bank’s CRA performance in a formal or informal manner. When federal agencies conduct CRA exams of banks’ lending, investing, and service activities in low- and moderate-income communities, federal agencies are required to consider the comments of members of the public concerning bank performance. Likewise, federal agencies are required to consider public comments when deciding whether to approve a bank’s application to merge or open and relocate branches.
It is important for community organizations to contact CRA officers of several banks in their community and discuss needs and opportunities with the CRA officers. As a result of advocacy and collaboration, CRA has leveraged trillions of dollars of bank financing and services for low- and moderate-income communities over the last three decades. Our nation’s low- and moderate-income communities would stand no chance of economic revitalization and empowerment if CRA was not the law of the land.
The CRA regulation establishes various tests for lending institutions of different sizes and a strategic plan option. Under each test, examiners rate banks according to their lending records and responsiveness to community needs. Banks receive a score based on their evaluations of “outstanding”, “satisfactory”, “needs to improve”, or “substantial noncompliance.” The last two scores can result in delays or denials of mergers, acquisitions, or expansions of services
A CRA rating can be downgraded if a federal agency uncovers evidence of illegal, abusive or discriminatory lending on fair lending exams that occur at about the same time as CRA exams. Community groups should bring fair lending concerns to attention of CRA examiners.
Borrower characteristics The lending test evaluates the distribution of loans to borrowers of different income levels to ensure that low- and moderate-income borrowers are receiving an adequate share of loans. This analysis can include all types of home loans from home purchase, home improvements, to refinancings. Federal examiners will also analyze consumer lending if such lending represents a substantial majority of the institution’s business. Finally, under the borrower characteristics section of the lending test, examiners will assess lending to small business and small farm borrowers of different sizes.