Fw:CRA analysis from Center for Community Change

I CAN America (icanamerica@email.msn.com)
Sat, 6 Nov 1999 16:55:08 -0500 

Hello all:
         The Center for Community Change has produced a very useful "damage
report" on the Community Reinvestment Act and economic justice as a result
of S900/HR10 "financial deform."  Included are the meagre 8 Senate votes
against S900, and the website where you can find the 57 House "nay" votes
(51 Democrats).  These brave few probably need to hear some encouragement
from their constituents.
         This CCC Policy Alert mentions that the Treasury Dept has been
sending out faxes to try to win over CRA advocates to the mistaken belief
that everything is AOK on the reinvestment front.  Since I was one of the
recipients, I can tell you that they did a fine job of gilding this
cow-pie, but the issues listed below still stand as huge challenges for
communities.
         This alert also does a good job of outlining some of the tasks
ahead for all of us.
Maryellen
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*** FORWARDED WITH PERMISSION ***
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Center for Community Change
Policy Alert # 174 [excerpts]

"FINANCIAL MODERNIZATION" BILL CLEARS CONGRESS
BACKGROUND: Champagne corks were popping on Capitol Hill and in the offices
of financial industry giants Thursday night, after the "financial services
modernization" bill cleared both houses of Congress by large margins. The
Senate voted first, with 90 members supporting the bill, 8 opposing it, and
one senator (Fitzgerald (R-IL)) voting "present." The eight senators voting
against the bill were Boxer (D-CA), Bryan (D-NV), Dorgan (D-ND), Feingold
(D-WI), Harkin (D-IA), Mikulski (D-MD), Shelby (R-AL), and Wellstone (D-MN).
The bill was brought up in the House late at night, and there the vote was
362-57, with 15 members not voting. 51 of the "no" votes were Democrats. A
list of those voting for and against the bill is available through the House
of Representatives website (www.house.gov - go to roll call votes, 106th
Congress, vote #570).

Next, the bill will go to the President's desk. He is expected to sign it
sometime this month.

While banking and financial services interests made out well in the bill,
low and moderate income communities, minorities, and consumers in general
didn't fare nearly as well. Community reinvestment advocates should be
pleased at the enormous impact that CRA had in the debate, but less pleased
with the final legislation. The worst attacks on CRA were defeated, but the
law took some blows:

* The "have and maintain" standard was scaled back. The House bill required
banks that wanted to cross industry lines and take advantage of new powers
to sustain their commitment to CRA performance or face regulatory
consequences. The final bill prohibits banks that don't have a CRA rating
of satisfactory or better from expanding across industry lines, but imposes
no penalties if their ratings slip after the expansion has taken place.

* Small banks, which constitute the bulk of the industry, will be examined
for CRA compliance less frequently.

* The so-called "sunshine" provision remains in the final bill. This
provision essentially codifies Sen. Gramm's (R-TX) notion that there is
something inherently shady about CRA agreements, and that they should be
subject to special disclosure and reporting. While the final language is
less onerous than the initial proposal, community groups may have to
navigate extremely complex legislative and regulatory language to figure out
whether they have CRA agreements and are obligated to file reports as a
result. (For more detail on these provisions, see last week's Policy
Alert.)

Perhaps the biggest disappointment for CRA supporters is the bill's failure
to modernize the concept of community reinvestment, and apply it to all of
the component parts of the newly created financial holding companies. CRA
may have been kept largely intact in the bill, but it will apply to an
ever-shrinking share of the financial services world.

Members of Congress, the Treasury and the White House have all heard from a
variety of community, consumer, civil rights and other organizations,
expressing opposition to the bill. 41 national organizations, including
community reinvestment, affordable housing, community development financial
institution, faith-based, labor, environmental and human services groups,
sent a letter to Congress urging a "no" vote. A number of groups have
called on the President to veto the bill. 20 members of Congress sent a
letter to the President, urging him to meet with community reinvestment
activists before he signs the bill to hear their concerns about the bill's
impact on CRA.

If the number of faxes emanating from the Treasury Department [to activists]
in the last week is any indication, the Administration seems to
be worried about how these constituencies will ultimately view the
legislation and its role in the bill's enactment. Hopefully, this concern
will translate into effective action on the regulations that are issued to
implement the "sunshine" provision, and into on-going support for a broader
community reinvestment agenda.

NEXT STEPS (SHORT TERM): The banking regulatory agencies are charged with
writing regulations to implement the "sunshine" provision in the bill. The
Administration has committed to putting these regs on a fast track.
Community groups and other CRA supporters will need to play an active role
in the rulemaking process to make sure that the final rules do as much as
possible to minimize the burden created by this provision.

NEXT STEPS (LONG TERM): CRA supporters have a lot of work ahead of them to
track the changes that will take place in the financial services industry in
the wake of S. 900, monitor their impact on low and moderate income
communities and communities of color, document the problems that may arise
as a result, and craft a public policy agenda to remedy those problems.

Another challenge will be to forge alliances with others who share similar
concerns, so as to build a strong coalition capable of moving that agenda.

MATERIALS AVAILABLE: We are still compiling a side-by-side comparison of the
various versions of the "financial modernization" bill. It will be
available by the end of this week through our fax-on-demand system (call
1-800-937-1093 and request doc. 1168) and on our website.

FOR MORE INFORMATION: contact Debby Goldberg at CCC's Neighborhood
Revitalization Project at (202) 342-0567 or by e-mail at
goldbergd@commchange.org

NOTE: To receive a document from our Fax on Demand service, dial our FOD
number, at 1-800-937-1093, and follow the automated instructions. If you did
not receive your fax, received an incomplete fax, or if you experience
technical difficulties, dial 703/716-0600 to speak to a person. To receive
back alerts, or an index of documents, request document #500 from the
automated system.

REMINDER: You can find our policy alerts in an easy to read format at
www.communitychange.org/alerts.

=====================================================================
H. C.  Covington - I CAN America
icanamerica@msn.com
Voice 1.800.678.5774
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