The Office of Thrift Supervision is soliciting comments on a proposed rule change. The comment period ends
January 24, 2005.
Excerpt from Domini Social Investments: "The Office of Thrift Supervision has proposed changes to CRA regulations that would allow thrift institutions (savings and loans) that have assets of more than $1 billion to pick and choose which community needs they will meet...the new changes would allow thrifts to obtain CRA credits by financing community development in affluent neighborhoods rather than poor ones. In addition, when two thrifts merge, they would no longer be required to meet with community groups to discuss the impact on the community."
As detailed below and at the linked sites, the effect is to bring back redlining: a practice which excludes minorities from financial opportunities in real estate markets.
Details and links below the fold...
This is an opportunity to TAKE ACTION on your progressive values - walk the talk. It seems to me that this proposed rule change will gut the essence of the CRA, by making it legal for the larger thrifts to, basically, spend their "community investments" wherever they want.
[Editorial Note:This is a re-post of some information that was presented in the diary Under the Radar, Your help Needed ASAP on Thu Jan 20th, 2005 at 22:28:54 EST by philinmaine. I have consolidated info from the previous diary and comments, and added some details.]
How to TAKE ACTION
Please try to "customize" your comments - i.e. add to or modify the text of the suggested email. This is important because, as you can see from the list of comments already registered, "duplicate" comments are flagged as such. What that will mean, I don't know - but I would assume more weight is given to an original comment than a "me too" submission.
Here's the link:
* Action Alert! at Domini Social Investments
(The link takes you to a site where you can send an email that will go to the right place and have all the appropriate legal references to be applied to the correct proposal.)
[A minor update - If you aren't comfortable revising the email - writer's block, lack of time, whatever - please DO send the email as-is. That's better than nothing, although not as good as customizing it.]
BACKGROUND
What is CRA?
From The National Community Reinvestment Coalition:
The Community Reinvestment Act (CRA), enacted by Congress in 1977, outlawed the practice of "redlining" by banks and other financial institutions. The CRA defined the responsibilities of financial institutions to provide equal treatment to all communities for which they are chartered, including low and moderate income communities. A companion law, the Home Mortgage Disclosure Act, required lenders to keep records of their home mortgage activity by geographical area. This information is used to determine whether financial institutions are meeting their CRA obligations.
More details, and slightly different perspective, from Inner City Press:
The Community Reinvestment Act is a federal law that was passed in 1977, to prohibit banks from refusing to lend in low and moderate income communities. Because this "redlining," as it is called, was found to be widespread, Congress passed CRA to ensure that "regulated financial institutions have a continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered."
The Gramm-Leach-Bliley Act of 1999 chipped away at the CRA, but by no means repealed it. This Act slows the CRA examination cycle for banks with assets below $250 million to once every four or five years, and imposes new reporting requirements on community groups that seek to enforce the CRA, including by submitting comments to the bank regulatory agencies.
As the statute makes clear, the CRA is only enforced in connection with banks' merger and expansion applications. The federal bank regulatory agencies periodically evaluate banks for their compliance with CRA, and assign them one of four ratings: Outstanding, Satisfactory, Needs to Improve or Substantial Non-Compliance. In 1998, the agencies rated over 98% of banks as either Outstanding or Satisfactory, despite that fact that, for example, the banking industry continues to deny the mortgage loan applications of African Americans and Latinos twice as frequently as those of whites. Statistics about loan approvals and loan denials can be determined by using the Home Mortgage Disclosure Act (HMDA) data that banks are required to make public each year.
Inner City Press also provides more recent history (in somewhat excruciating detail) on their CRA Reporter page. For example,
James Gilleran [current director of OTS]...is on a crusade to weaken CRA. His approach is at odds with the other three federal bank regulatory agencies, and with his own predecessors at the OTS. For example, under previous OTS directors Seidman and Fiechter, ICP had experience with the informal and formal hearing process that James Gilleran has now unilaterally eliminated. The process served to narrow and sharpen issues, and resulted in improved services of low- and moderate-income areas.
I'm not convinced - Why should I put my name on this fight?
My first rule of thumb is that I can't possibly research everything to the nth degree myself. I need some help. So my strategy is to research enough to get a sense of the situation and what the impacts probably are. Then I try to find out how various organizations are responding, and rely on them to have researched the issue in depth to come up with their public position. So here's my thinking on this issue.
Domini Social Investments - the source of the info in the original diary - is a respectable organization that I have been aware of for years as a leader of the "socially responsible investing" movement. Although I have not had time to closely study this rules change (the draft can be downloaded here - top of page under the title), I think we can rely on Domini's interpretation here. If they are fighting it, it needs to be fought.
A Google search yields the following site: Inner City Press' Community Reinvestment Act Guide. This is general info that doesn't include the proposed change, but has a good history of the Community Reinvestment Act. An interesting point is made here:
Despite that fact that the regulators have been largely "captured" by the banking industry, CRA can sometimes be enforced in a way that benefits our communities, particularly when grassroots community groups challenge bank-on-bank merger and expansion applications. When banks apply to buy another bank, or to otherwise expand, CRA requires the regulators to consider the applicant bank's record of serving low and moderate income communities.
But as Domini reports, the proposed rule change includes this little nugget: "...when two thrifts merge, they would no longer be required to meet with community groups to discuss the impact on the community."
So, what Inner City Press reports as the final avenue for community groups to enforce CRA goals, will be taken away by this rule change. If I'm reading it right.
Isn't this a little quixotic?
A discouraging indicator on the Inner City Press update site is that as of January 21, only 193 comments had been received (the "vast majority" opposing the rules change). That hardly seems enough to sway any BushCorp-driven agency off the path of undermining anything it sees fit (i.e. anything that has a shred of progressivism).
But, there are other reasons for acting.
First off, if you take this seriously and get your friends to act also, who knows - that 193 number could multiply fast. WE CAN STILL WIN. But, we need you - and everyone you can influence.
Secondly, if the rules commenting process is unfamiliar to you, this is a chance to exercise the system and practice participating.
Most importantly, you cannot control what others do, but you can control what YOU do. We can't succeed in this effort without you. Sure, we may not "succeed" anyway - at least on this specific rule change - but you will have done your part in trying.
Or, as Gandhi said: Whatever you do may seem insignificant, but it is most important that you do it.
One final request -
Please recommend this diary so more people will see it and can decide to act. Then submit your comment and send this to all the progressives on your email list.
Thanks!