I just stumbled across a relatively new swath of right wing postings about how the Federal Government used the Community Reinvestment Act (CRA) to "force" so many financial institutions into making risky loans.  I actually went to this Department of Justice posting  of an opinion issued to the Comptroller of the Currency by Bill Clinton's Assistant Attorney General Walter Dellinger on 15 December 1994.  The most instructive excerpt is:

We believe that Congress has plainly spoken on the question of what enforcement tools are available to the agencies under the CRA. The CRA provides for enforcement only in the application context, requiring that the agencies shall take an institution's record of meeting the credit needs of its community into account when evaluating that institution's application for a deposit facility. Congress specified only this one enforcement mechanism in the CRA, and we do not believe it is permissible for the agencies to employ other enforcement mechanisms, on the authority of the CRA, in the absence of some basis in the text of the statute. Agencies may act only pursuant to delegations of power that are explicit or can fairly be implied from the statutory scheme. See Railway Labor Executives Ass'n v. National Mediation Bd., 29 F.3d 655, 670-71 (D.C. Cir. 1994) (en banc).

    The CRA contains no express directive for the agencies to use any other modes of enforcement, much less such coercive enforcement as cease-and-desist orders and monetary penalties, and there is no basis for inferring such authority from any provision in the statute.


Footnote 7 is even more illuminating as to the nearly complete impotence of the CRA to "force" anybody to do anything.


The case law recognizes that while the agencies are authorized to refuse to approve applications from financial institutions that do not meet the credit needs of their communities, they are not required to do so. In one case that involved a challenge to an agency's approval of an institution's application to open a branch office, the court refused to invalidate the approval on the grounds that the agency and the requesting institution had allegedly failed to comply with the requirements of the CRA. Corning Sav. & Loan Ass'n v. Federal Home Loan Bank Bd., 571 F. Supp. 396 (E.D. Ark. 1983), aff'd, 736 F.2d 479 (8th Cir. 1984). The court stated that "[t]he CRA itself does not provide for any sanctions for an unsatisfactory record, nor does it even define what an unsatisfactory record would be. The CRA merely requires that the Board assess an institution's community credit record and consider that record when evaluating branch applications."

Go to the link and read the entire text for yourself.  If you are persuaded that the CRA enforcement mechanisms described made it the incredibly powerful blunt force instrument the right wingers contend, maybe you will support my idea.  Modeled on the draconian punishment threat of the CRA, lets revise drug trafficking laws to eliminate criminal sanctions and even civil fines and penalties.  If caught, just empower the police to deny drug dealers any ability to expand their business, take on new customers, or merge with other dealers.   Obviously, if like the banks,  they were denied the ability to do any of those things, they would be compelled to just pack it in and give up.  Hell, the CRA sanctions were so scary that financial institutions not even covered by the CRA were intimidated and fell in line.                                                  

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