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For Immediate Release: January 21, 2004

Reps. Frank and Sanders Call for Congressional Hearings on CRA Proposal

WASHINGTON—House Financial Services Committee Ranking Member Barney Frank (D-MA) and Rep. Bernie Sanders (I-VT), the Ranking Member of the Financial Institutions and Consumer Credit Subcommittee today called for a hearing into proposed changes to Community Reinvestment Act (CRA) regulations.

The Federal Deposit Insurance Corporation (FDIC) Tuesday announced its proposed rulemaking that would allow institutions with up to $500 million in assets, instead of $250 million according to current rules, to face less stringent CRA requirements. The proposed rule would also let institutions exclude lending activities of certain affiliates from CRA examinations and create a vague and weak anti-predatory lending standard.

In a letter to Committee Chairman Michael Oxley (R-OH) Reps. Frank and Sanders stressed the need for Congress to review the impact of the proposed regulations. The financial regulators have also heard from several community groups opposed to the changes. Last week during the Federal Reserve Board’s hearing in Boston on the proposed merger of FleetBoston and Bank of America numerous speakers stressed the importance of the CRA as a tool for community and economic development.

“The regulators’ proposals to cut back on CRA goes in precisely the wrong direction,” said Rep. Frank. “For example, with financial industry consolidation going forward so rapidly, allowing institutions to exclude large parts of their activities from CRA requirements is an assault on the principles behind the Act.”

“The Community Reinvestment Act has been instrumental in increasing affordable housing, and making sure that banks throughout this country play a more responsible role in their communities,” said Rep. Sanders. “The CRA is working extremely well and must not be weakened. Instead of diminishing the CRA, as the proposed regulations call for, we must strengthen it. If this proposal goes into effect, fewer people will realize the dream of homeownership, fewer small businesses will get off the ground, fewer jobs will be created, and fewer neighborhoods will be rebuilt. I look forward to working with the regulators and Ranking Member Frank, and other Members of the Financial Services Committee to make sure that this disastrous proposal does not go into effect.”

The Community Reinvestment Act was enacted in 1977 to address redlining by requiring banks to make loans in neighborhoods where they collect deposits. The Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS) are expected to approve the proposal soon and issue it for public comment.

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The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.