Office of Citizen
Rest in Peace,
Expand the Community Reinvestment Act to Bring Trillions MORE Dollars in Safe and Sound Investments to America's Neighborhoods
Submitted by Norm Roulet on Tue, 12/07/2010 - 05:15.
I recently met with Marcia West, Regional Organizer for the National Community Reinvestment Coalition (NCRC), in Washington, DC, to explore how economically distressed communities should respond to the foreclosure and housing crises in America, to expand credit access for working-class residents - to learn what leaders of Northeast Ohio may do to improve access to loans for housing and community development for us common folk. The short answer is "Expand the Community Reinvestment Act to Bring Billions of Dollars in Safe and Sound Investments to America's Neighborhoods" - go to Expand CRA to learn more and contact your representatives... SPREAD THE WORD!
CRA encourages banks to respond to a variety of needs in low- and moderate-income communities, including the financing of affordable rental housing, sustainable homeownership, small business creation, and economic development projects.
NCRC is an association of more than 600 community-based organizations that promote access to basic banking services including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America's working families. Their mission is "To increase fair & equal access to credit, capital, and banking services/products because discrimination is illegal, unjust and detrimental to the economic growth of underserved communities in the United States and around the world."
The City of Cleveland is a member of NCRC, and our CDCs should be active members as well - I am compiling a list of NCRC member organizations concerned with the sustainability of this region - all should be vocal and active supporting expanding CRA!
TODAY, they need the help of the CITIZENS OF NORTHEAST OHIO and the entire community development world to contact CONGRESS - IN THIS LAME DUCK PRE HOLIDAY SESSION - and tell our representatives to PASS HR 6334, the American Community Investment Reform Act of 2010, introduced in the House on September 29 to EXPAND THE COMMUNITY REINVESTMENT ACT!
To rebuild the Northeast Ohio economy - and make it socially-just and sustainable here - we must address the still-snowballing foreclosure, credit, lending and housing crises that have decimated middle- and lower-income family wealth and stability in America... and pounded many neighborhoods of Ohio this past decade, and especially since 2007.
As predatory lenders flooded America with unethical subprime financing, under too-lax regulation, with an absence of adequate systemic Federal oversight - largely at arm's-length from mainstreet banking - they inflated credit and housing bubbles, and a massive percentage of American families fell under unsustainable, often unethical housing burdens, exorbitant fees and crippling debts (compounded by lax, high interest auto, credit card and consumer loan debt), breaking the financial stability, confidence and backs of American citizens, pushing America into recession and high unemployment, driving much of the American working-and-below-class into insolvency and onto the streets... their houses to be boarded up, land-banked, demolished or otherwise disposed-of by the unjust systems that over-indebted and mis-leveraged the working-class in the first place.
While we may battle many challenges in rebuilding Northeast Ohio, most important to the stability of our economy and the well-being of residents here is stopping the decimation of the wealth of our families and neighborhoods from the harm of foreclosure-related corruption... unjust business, legal and political leadership.... AND their predatory lending systems.... while expanding the flow of investment, loans and capital to low-and-middle-income residents of poor and underserved communities, who have been especially hard hit by the credit crisis now upon them.
We need to reestablish bankability for those citizens disembanked from our neighborhoods and society, against their good will and best means, when those means are sufficient to in fact sustain citizens under fair housing and lending terms and conditions.
One of the most important Federal government tools for ensuring fair, equitable flows of loans, capital investments and services from banks in America to the communities they serve is the Community Reinvestment Act, which rates banks on their performance lending to underserved populations.
Low CRA ratings may impact banks' ability to expand or merge, and the CRA has clearly had an impact on banks in Northeast Ohio, encouraging them to expand services in poor areas, to underserved people, to improve their standing with CRA.
See how your bank rates here... mine got just "satisfactory", and I agree... we are shopping for a new bank and now are most impressed with Key Bank, which consistently ranks "outstanding" with CRA.
From the CRA website: "The Community Reinvestment Act (CRA), enacted by Congress in 1977 (12 U.S.C. 2901) and implemented by Regulations 12 CFR parts 25, 228, 345, and 563e, is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate."
While CRA encourages fair lending by banks to low and middle income residents of poorer neighborhoods - urban and rural - and so CRA increases banks' exposure in supposedly high-risk communities, to high-risk customers, CRA fair lending programs have driven over $1 TRILLION in private investment into underserved communities, at no direct cost to taxpayers (referred to as deficit-neutral), and loans from CRA-rated institutions are not cratering with the rest of the American credit and real estate economies, during this brutal recession... they are NOT in fact high-risk nor speculative, but productive. From CRA:
Yet - not surprising, in these politicized times - CRA has come under attack from some right-wing extremists as a cause of the bank and housing meltdowns in America, actually caused outside CRA oversight. These attacks against CRA are part of industrial efforts to minimize government oversight of financial industries in general, and to prevent expansion of CRA to rate financial institutions currently beyond their oversight, like credit unions and subprime mortgage lenders.
As reported in the American Prospect, in April 2008 - "Conservatives blame the housing crisis on a 1977 law that helps-low income people get mortgages. It's a useful story for them, but it isn't true." - "The idea started on the outer precincts of the right. Thomas DiLorenzo, an economist who calls Ron Paul "the Jefferson of our time," wrote in September that the housing crisis is "the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers." The policy DiLorenzo decries is the 1977 Community Reinvestment Act, which requires banks to lend throughout the communities they serve."
Yet, from American Prospect, "CRA applies only to banks and thrifts that are federally insured; it's conceived as a quid pro quo for that privilege, among others. This means the law doesn't apply to independent mortgage companies (or payday lenders, check-cashers, etc.)". The author points out...:
Honest Republicans agree.
Think Progress reports - and starting around minute 3:50, the video above shows - outgoing South Carolina Republican Representative Bob Inglis has criticized those on the right who blamed the Community Reinvestment Act (CRA) for causing the 2008 financial crisis:
And, well-respected Republican Jack Kemp - Reagan's Housing Secretary - states above, "oh, by the way- the crisis...the financial crisis of America today was not caused by the Community Reinvestment Act. Let me just make it very very clear- the Community Reinvestment Act...I'm so sick of people in my party saying that making loans to low income people was Ipso Facto the cause of this breakdown of our financial institutions - nonsense." Oct.2008
In fact, it is in the best interests of America and all Americans to expand CRA, as currently proposed before congress... HR 6334, the American Community Investment Reform Act of 2010.
The lack of CRA-type oversight beyond banking is a major reason for the rise and popping of the housing bubble, with uncreditworthy people getting loans under unethical terms from predatory lenders. Real CRA-regulated banks write real loans to real people, under really fair terms, under the watchful eyes of many regulatory agencies... and real people repay these fair loans... all with the help of CRA.
For that reason, the current bill before congress expands CRA oversight over the broader portfolio of community loan providers, to insure sufficient amounts of fair credit are provided to all citizens, so they are not entrapped in predatory loans... HR 6334, the American Community Investment Reform Act of 2010.
Go to the EXPAND CRA website for complete information on this bill, the Community Reinvestment Act, and ways to inform your representatives on this important issue. There are tools there for contacting your representatives and supporters of HR 6334.
The Community Reinvestment Act is a subtle bill that brings massive investment to low and middle class urban and rural communities simply by helping to make loans available. It leverages a private sector commitment by banks to lend to the underserved, so it is considered deficit neutral. In fact, outcomes enabled by the loans and investments resulting from the CRA grow the economy, so it increases American Gross Domestic Product and so adds to the economy.
As I have learned more about CRA, I greatly appreciate its' significance. Since 1977, CRA has worked with the MAINSTREET bank industry to insure all BANKS make credit, capital and services available to underserved people, markets and communities, like found throughout Northeast Ohio.
Citizen outrage and activism against corruption in the financial world and at home is making great impact in changing local and federal policies to help residents keep their homes, but the battle has barely begun, and more policies must be changed at home and in Washington, DC, including by passing HR 6334, the American Community Investment Reform Act of 2010 to expand the CRA.
Go to the NCRC website here for more information on that pivotal organization - this is especially valuable if you are involved with government community organizing, social equity, fair housing and sustainable community development! Feel free to contact NCRC to discuss this issue and offer direct help!
Area mayors - Councilpeople - CDC Directors - County Executives - County CEOs - get on the phone to Marcia West at 202-383-7701 - email mwest [at] ncrc [dot] org - and ask how your organization may help pass this bill... don't sit on the sidelines and let this important legislation go lame... make this your hoilday gifts to your stakeholders.
Here are the NCRC recommendations on HR 6334:
Here is a sample letter they ask citizens to send to their representatives, for more background:
Northeast Ohio must help current residents KEEP THEIR HOMES and REBUILD THEIR CREDIT - we must create fair, better channels for lower- and middle-class residents to access credit - including for those whose credit was harmed when the last housing bubble popped - so regular, every-day folk may buy and maintain sustainable housing for themselves, to rebuild ond sustain our region.
Predatory lender greed flooded sickness into a festering multi-year housing bubble in America that resulted in the unsustainable migration of people and mis-deployment of natural resources around America, leaving shallow communities of empty shells - in many cases, entire neighborhoods of stable residents have been wiped out by unethical lending practices, and entire communities are being bulldozed.
If Northeast Ohio wants to maintain - and grow - a sustainable community in the millions - see a Cleveland of over 500,000 people again - then citizens choosing to live here need fair access to loans for housing... at all income levels, in all neighborhoods.