Dems push expanded Community Reinvestment Act; deny Act's role in mortgage
meltdown; GOP cites ACORN connection
By: Byron
York
Chief Political Correspondent
09/16/09 4:13 PM EDT
A number of experts believe that aggressive enforcement of the 1970s-era
Community Reinvestment Act contributed to the mortgage meltdown, and thus to the
greater financial crisis, by requiring financial institutions to lend to
unqualified borrowers. Now, the Democratic majority in the House of
Representatives is responding to that situation by proposing to expand the scope
and power of the Community Reinvestment Act.
This morning House Financial Services Committee chairman Rep. Barney Frank
held a hearing on H.R. 1479, the
"Community Reinvestment Modernization Act of 2009." The bill's purpose is
"to close the wealth gap in the United States" by increasing "home ownership and
small business ownership for low- and moderate-income borrowers and persons of
color." It would extend CRA's strict lending requirements to non-bank
institutions like credit unions, insurance companies, and mortgage lenders. It
would also make CRA more explicitly race-based by requiring CRA standards to be
applied to minorities, regardless of income, going beyond earlier requirements
that applied solely to low- and moderate-income areas.
Republicans on the committee strongly oppose the plan. "Instead of looking to
expand the number of institutions that must abide by Community Investment Act
regulations," California Rep. Ed Royce said in prepared opening remarks at
today's hearing, "I think we should reassess the role this and other government
mandates played in the financial collapse and consider scaling it back."
In private conversation, other Republicans were more emphatic. "There is
clearly arguable evidence that the CRA is at the root of this financial
meltdown," says one GOP committee member. "So what do they do? They try to
expand CRA."
But Democrats, led by H.R. 1479 sponsor Rep. Eddie Bernice Johnson,
claimed that expansion of CRA is much-needed. "Congress has passed a number
of laws designed to combat redlining and eliminate housing discrimination,"
Johnson said at the hearing. "Unfortunately, we all know that redlining still
occurs."
Then there is the ACORN angle. Republican critics point out that the
Association of Community Organizations for Reform Now has used the CRA to
pressure banks to pour money into ACORN and its affiliates, allowing ACORN to
facilitate loans to clearly unqualified borrowers. Now, with ACORN under fire
after a series of undercover videos showing ACORN workers in Baltimore,
Washington DC, New York, and California openly encouraging prostitution, tax
evasion, and other crimes, Republicans on the committee are citing the CRA-ACORN
connection as yet another reason the Act should not be expanded.
Johnson's bill has 51 co-sponsors, including some of the most liberal members
of the House, like Reps. Dennis Kucinich, John Conyers, Bobby Rush, Steve Cohen,
and Barbara Lee. Given the Democrats' tremendous numerical superiority in the
House, if the majority wants to expand CRA, Republicans will be unable to stop
it.
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