Community Revinvestment Act Introduced in Congress
On March 6, 2001, Rep. Thomas Barrett (D-WI) introduced the Community Reinvestment Modernization Act of 2001 (H.R. 865) into the 107th Congress. The bill is designed to update the Community Reinvestment Act (CRA) to keep pace with the rapid changes that are occurring in the financial services marketplace. The bill would amend the CRA to cover all loans and lenders - including not only mortgage companies, but also insurance companies, investment firms and other affiliates of banks that will increasingly be offering loans and basic banking products in the new financial world.
In addition to extending the Community Reinvestment Act to all loans and lenders, the bill would:
- make insurance more available, affordable and accessible to minorities and low-income citizens;
- improve data collection for small businesses and farm loans;
- require a notice and public comment period for mergers between banks, insurance and investment companies;
- add to the required lending data information on loan pricing and terms, including interest rates, discount points, origination fees, financing a lump sum insurance payment premiums, balloon payments and prepayment penalties;
- prohibit insurance companies that violate fair housing court consent decrees from affiliating with banks; and
- penalize a financial institution and its affiliates through reduced CRA ratings if the institutions have engaged in predatory lending.
The bill was referred to the House Committee on Financial Services, the Subcommittee on Financial Institutions and Consumer Credit, and the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, where it awaits further action. It currently has 36 co-sponsors.
