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JUNE 30, 1999  3:05 PM
FOR IMMEDIATE RELEASE
CONTACT:
National Community Reinvestment Coalition
John Taylor or Josh Silver, 202-628-8866
Bank Bill Helps the Financial Industry, But Not Working People
 
WASHINGTON - 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 hands.

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.

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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.

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