Discussing the Community Reinvestment Modernization Act of 2009
This morning, the National Community Reinvestment Coalition held a breakfast meeting with members of Congress to discuss H.R. 1479, the Community Reinvestment Modernization Act of 2009. As the name implies, this bill would modernize the Community Reinvestment Act (CRA), originally passed in 1977. AFFIL and hundreds of other groups are supporting this legislation (see this letter of support and PDF toolkit about CRA).
At the breakfast, NCRC and other groups will highlight why CRA has been valuable for various constituencies. The National Council of La Raza (NCLR) will discuss the Latino perspective on access to homeownership and why CRA is important to the Latino community, while the National Urban League will show why CRA is important to minority and urban communities. The Low Income Investment Fund (LIIF) will discuss how CRA has been tremendously successful with respect to non-mortgage related investments (i.e. multi-family affordable housing, shelters, daycare), and the Greenlining Institute will show why CRA modernization is desperately needed for small minority and women-owned businesses.
Certain lenders are subject to CRA “exams” which grade them based on their work in low and moderate income communities. Contrary to some perceptions, CRA exams do not give banks high scores for promoting unsustainable lending. In fact, study after study confirms that banks subject to CRA scrutiny made only a tiny fraction of the toxic subprime loans which have led to so many foreclosures.
CRA exams encourage banks to lend in conformity with safety and soundness. If all lenders (including non-bank mortgage companies) had been subject to these exams, we would likely be facing a much smaller housing crash than we are. The CRA Modernization Act (H.R. 1479) being discussed at today’s breakfast would make this common sense change so that all lenders would be subject to CRA scrutiny. If the past thirty years are any guide, this will lead to more responsible behavior by more lenders, and greater investments in low and moderate income communities.
For more information, see this Toolkit on CRA (PDF) put together by NCRC.