New Report from LCCR/LCEF Calls for the Revamping of the Community Reinvestment Act
Feature Story by Menna Demessie - 7/17/2002
The Leadership Conference on Civil Rights and the Leadership Conference Education Fund (LCCR/LCEF) have released a report calling for the revamping of the Community Reinvestment Act (CRA) in order to keep pace with the realities of modern lending.The report, "Building Healthy Communities: the Community Reinvestment Act and the Financial Modernization Movement," while congratulatory of CRA’s achievements, addresses the continuing need for vigorous enforcement of laws protecting equal opportunity housing and lending rights for minorities from redlining and discriminatory practices.
“The CRA made bankers take a close look at the communities around them and what they found were bright entrepreneurs, responsible homeowners and people with a vision of how to build the spirit and infrastructure of their communities,” said Wade Henderson, Executive Director of the LCCR.
Among the report’s recommendations are the need for CRA to expand its jurisdiction beyond insured depository institutions--banks and savings associations whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). The report states “many banks are holding companies which own banks, thrifts, loan companies, mortgage companies, and financial institutions. Holding companies are not insured depository institutions and therefore CRA does not apply to them.”
Crucial to upholding CRA’s standards of enforcement, the LCCR also recommends that CRA be revised in a manner consistent with the changes taking place in banking services and other entities. The report states that “banks are closing branches and providing more services through the Internet and automatic teller machines (“ATMs”). Low income individuals are less likely to have access to the internet. Inasmuch as more institutions are able to provide services historically provided by banks and all institutions are changing the way in which they provide banking services, the CRA needs to be revised to capture these institutions and new mechanisms of providing services.”
