National Association of Counties * Washington, D.C.            Vol. 31, No. 9 * May 10, 1999

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Bill could undermine CRA strength

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A number of provisions in a bill passed by the Senate this week would undermine the effectiveness of the Community Reinvestment Act (CRA). The CRA requires banks to make loans to potential homebuyers and businesses located in low income areas.

"Since it began in 1977, CRA has been instrumental in the revitalization of literally tens of thousands of communities nationwide. It continues to be an important tool in the on-going efforts to help people and communities achieve their goals of community resurrection, development and growth at no cost to America’s taxpayers," said Robert Janiszewski, Hudson County (N.J.) executive and chairman NACo is Community and Economic Development Steering Committee.

The bill, S. 900, approved by the Senate Banking Committee last month, contains provisions that would:

• release banks within a holding company from maintaining a satisfactory CRA rating. A CRA ratings reflect a banks’ lending activities in the communities in which they are located;
• create a safety net for institutions with a satisfactory or better CRA rating that prohibits regulators from considering public comments when banks apply for mergers; and
• exempt banks with less than $100 million in assets from CRA entirely.

NACo has long opposed weakening the Community Reinvestment Act.

The bill was passed by the Senate on a 54-44 vote. A hearing was held last week on a similar bill (H.R. 10), which is currently in the House subcommittee of Finance and Hazardous Materials of the House Commerce Committee. A committee decision on the bill has not yet been scheduled.

NACo urges that you contact your congressional delegation in opposition to any weakening of the CRA.