News
Campaign opposes gutting of Community Reinvestment Act
9/4/2004 12:00:00 AM

Rural community development organizations from across the United States are helping to create a national coalition to stop federal bank regulators from gutting key provisions of the Community Reinvestment Act (CRA).

Regulatory changes proposed by the Federal Deposit Insurance Corporation (FDIC) would reduce the number of banks that must undergo a complete CRA exam from 1,110 to 219, a decline of 80 percent.

Stand Up for Rural America, a national network of 1,800 rural community development groups, is one of 35 organizations signed on to support the campaign to protect key provisions of CRA.

"The proposed changes threaten to jeopardize loans and investments for the very people and places that need them most -- low- to moderate income families and communities, especially in rural areas," said Robert S. Warwick, chairman of the Stand Up for Rural America Steering Committee and a retired group vice president of the Federal Home Loan Bank of Atlanta.

Representatives of the community development network will participate in a press conference Thursday, September 9 at 1 p.m. in Room 406 of the Dirksen Senate Office Building on Capitol Hill.

Other members of the national coalition opposing changes in CRA include consumer protection groups such as Consumers Union and the Consumer Federation of America, civil rights organizations including the NAACP and the National Council of La Raza, community development supporters such as Local Initiatives Support Corporation (LISC) and the National Alliance of Affordable Housing Lenders, and labor unions such as AFL-CIO and the United Auto Workers.

One member of the coalition, the Center for Rural Strategies, will place an advertisement in the Washington Post Thursday asking, "Will the president's promise of an ownership society include rural America? Only if the FDIC stops messing with the Community Reinvestment Act."

CRA is a federal law that requires banks to provide loans, investments, and services to low- to moderate-income people and communities in their service areas. Since 1977 CRA has helped channel $1.5 trillion in loans and investments, as well as banking services, to marginalized communities. The act is especially important in rural areas where there are fewer banks and less investment to support community development activities, advocates say.

"This is an ill thought out policy," said Lorna Bourg, president of Southern Mutual Help Association, a LISC-supported community development organization serving southern Louisiana. "Rural families and communities have benefited from the current CRA. Any drop in direct investment in community building will be devastating."

The FDIC has proposed exempting banks with up to $1 billion in assets from the full CRA review, a four-fold increase in the current $250 million asset threshold. Two other agencies regulating banks, the Federal Reserve and the Office of the Comptroller of the Currency, rejected a similar proposal but seem to be having second thoughts. The third and smallest bank regulator agency, the Office of Thrift Supervision, has already enacted the changes.

Originally issued by Center for Rural Strategies
Posted by: SMHA | Tell a friend



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