INTRODUCTION OF THE COMMUNITY REINVESTMENT MODERNIZATION ACT OF 2001 -- HON. THOMAS M. BARRETT (Extensions of Remarks - March 06, 2001)

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HON. THOMAS M. BARRETT OF WISCONSIN IN THE HOUSE OF REPRESENTATIVES Tuesday, March 6, 2001

Mr. BARRETT of Wisconsin. Mr. Speaker, I am pleased to reintroduce today, in partnership with my colleague, Rep. LUIS GUTIERREZ, the Community Reinvestment Modernization Act of 2001, a very strong piece of legislation to modernize our fair lending laws to keep pace with the times. We first introduced this legislation during the last session of Congress in July of 2000.

There are a lot of people who have worked very hard to bring us to this point today and I'd like to say a special word of thanks to the National Community Reinvestment Coalition. In particular, John Taylor and Josh Silver have been instrumental from day one in drafting this legislation.

This bill is absolutely critical to helping creditworthy Americans gain access to credit and banking services. Since 1977, CRA has encouraged banks and thrifts to commit more than $1 trillion in private reinvestment dollars for mortgages, small business loans and community development loans for traditionally underserved communities. In the Milwaukee area alone, CRA has channeled over $200 million in lending to low- and moderate-income citizens and neighborhoods.

The timing for CRA is crucial. CRA will become less effective if it is not updated to keep pace with the rapid changes that are occurring in the financial services marketplace as a result of the Gramm-Leach-Bliley Financial modernization Act of 1999. The Community Reinvestment Modernization Act of 2001 will ensure that the hundreds of thousands of Americans, most often minorities and the working poor, will continue to have access to capital and credit.

The bill is endorsed by the National Community Reinvestment Coalition, the U.S. Conference of Mayors, the National League of Cities, and the Association of Community Organizations for Reform NOW (ACORN).

In my hometown of Milwaukee, it is supported by the Mayor of Milwaukee, the Fair Lending Coalition, Interfaith Conference of Greater Milwaukee, Hope Offered through Shared Ecumenical Action (HOSEA), the Local Initiatives Support Corporation (LISC), the Neighborhood Housing Services of Greater Milwaukee, Milwaukee Innercity Congregations Allied for Hope (MICAH), the Metropolitan Milwaukee Fair Housing Council, the National Association for the Advancement of Colored People (NAACP), Select Milwaukee and the Legacy Bank.

So many people and institutions support this bill because CRA is not only the right thing to do, it is the profitable thing to do. According to a Federal Reserve Board report issued in July of 2000, 91% of home lending and 82% of small business lending under CRA is profitable. This is comparable to any other type of lending.

The bill we are reintroducing today will update CRA to match the increased market powers the Financial Modernization Act creates. It will make banks accountable again by updating CRA to cover all loans and lenders. This not only includes 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 CRA to all loans and lenders, the CRA Modernization Act of 2000 would: (1) Make insurance more available, affordable and accessible to minorities and low-income citizens; (2) improve data collection for small business and farm loans; (3) require a notice and public comment period for mergers between banks, insurance and investment companies; (4) require that HMDA data also include information on loan pricing and terms, including interest rates, discount points, origination fees, financing of lump sum insurance payment premiums, balloon payments, and prepayment penalties; (5) prohibit insurance companies that violate fair housing court consent decrees from affiliating with banks; and (6) penalize a financial institution and its affiliates through reduced CRA ratings if the institutions have engaged in predatory lending.

CRA is paramount to continuing the progress this country has made towards eradicating discrimination in the financial services marketplace. And it is imperative that we modernize this important law now. The bottom line is that CRA is good for business. It not only levels the playing field to make sure that all creditworthy Americans have access to capital and credit, it makes good business sense.

We hope you and all of our colleagues in the House will consider supporting the Community Reinvestment Modernization Act of 2001.
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