- June 30 - The 700-member organizations of the National Community Reinvestment
Coalition (NCRC) call on Congress to go back to the drawing board and design a
financial modernization bill with communities in mind, not only big business interests.
The House of Representatives
is expected to vote on H.R. 10, the Financial Services Act of 1999, this Thursday.
H.R. 10 will vastly increase the market power of the nation's banks, insurance
companies, and securities firms by allowing them to own each other outright without
any limitations. The bill, however, does not update community and consumer protections
to deal with the rapid consolidation of the financial industry's assets into fewer
NCRC's Chairperson Gail
Burks of the Nevada Fair Housing Center noted, "This decade has been the most
profitable in the history of the American banking industry. Yet every working
person knows, without looking at fancy studies, what mergers, consolidations and
the changing banking environment really means -- higher fees, fewer loans, fewer
bank branches, thousands of lost jobs, and greater inconvenience."
John Taylor, President &
CEO of NCRC, added, "Sen. Phil Gramm (R-Tex.) has polluted the quality of the
debate around financial modernization. Congress should debate a bill that balances
the corporate interests with the general public's need to have fair, equal, and
affordable access to credit, capital and basic banking services."
The only hope for H.R. 10
offering any value to the American consumer is contained in the amendment offered
by Rep. Luis Gutierrez (D-Ill.) and Thomas Barrett (D-Wis.) who are proposing
to update CRA as the financial industry is modernized. They are offering an amendment
that would apply CRA to any affiliate of a bank holding company that is lending
or offering banking services. After a financial modernization bill is passed,
it will be increasingly common for insurance companies, mortgage companies, and
other affiliates of banks to be offering loans. CRA's effectiveness could be sharply
reduced if its net does not cover all the lending activities of bank holding companies.
A second amendment being
offered by Reps. Gutierrez and Barrett would require insurance company affiliates
of banks to report data on customers for home, auto, and business insurance by
the race, income, and neighborhood in which they reside. Like the HMDA (Home Mortgage
Disclosure Act) data on home loans, this data will help community organizations,
local public agencies, and insurance companies identify missed market opportunities
in traditionally underserved neighborhoods.
"Senate Republicans voted
to weaken the CRA in S. 900, which is the Senate version of financial modernization
legislation. In the end, Sen. Gramm will probably drop his anti-CRA effort in
favor of a "clean" banking bill that will not trigger a Presidential veto. And
in the end the American consumer will see a banking bill that allows for increased
concentration of assets in fewer financial institutions, allows insurance and
securities firms into the banking business, and does absolutely nothing in the
way of insuring people's access to credit and capital," adds NCRC's John Taylor.
If H.R. 10 passes, the differences
between it and S. 900 will have to be reconciled by a House-Senate conference.
"The bank and insurance
PAC money spent to get Congress to pass this bill fundamentally undermines the
very premise of our democratic society. This bill serves only corporate interests
and misses too many opportunities to insure that all Americans have access to
affordable, competitive and quality banking services and products." maintains
NCRC Board Member Pete Garcia of Chicanos Por La Causa from Phoenix, Ariz.
Fellow Board Member Morris
Williams of the Coalition of Neighborhoods from Cincinnati, suggested that, "Passing
a banking bill is more probable than it has been in the past 20 years, but sadly
the bill hurts most consumers. But it will also hurt the Republican Party, which
has blindly followed Sen. Gramm down the path of being recognized as the party
that supports financial conglomerates and opposes consumers. It will be interesting
to see how many Republican Senators and Representatives attempt to explain their
pro-monopoly, anti-fair lending votes before an American public that mistrusts
large financial institutions. Where will Sen. Gramm be when those elected officials
stand naked and defenseless before their constituents who have little sympathy
for their love affair with banks and insurance companies."
Taylor concludes, "Our hope
is that this Congress fails in its effort to pass this pro-industry bill and that
the 107th Congress has the real debate that the 106th passed over. It will be
up to the next Congress to decide what is in the best interests of working people,
not just banks and other segments of the financial industry."
The Community Reinvestment
Act (CRA) requires banks and thrifts to serve all communities, including low-
and moderate-income neighborhoods, in which they are chartered and from which
they take deposits. Federal Reserve Board Governor Edward Gramlich recently estimated
that CRA helps leverage about $117 billion a year in home, small business, and
community development loans for working class and minority communities. Federal
Reserve Board Chairman Alan Greenspan has said that CRA has encouraged lending
institutions to pursue "foregone business" opportunities in underserved communities.
Countering charges that CRA amounts to credit allocation, Chairman Greenspan says
that CRA enhances and does not restrict markets.
The National Community Reinvestment Coalition (NCRC) is the nation's CRA trade
association of more than 700 community reinvestment organizations dedicated to
revitalizing inner city neighborhoods and rural areas by promoting partnerships
between lenders and community leaders.