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Washington
Hensarling introduces legislation to repeal CRA
WASHINGTON (4/16/10)--Rep. Jeb Hensarling (R-Texas) on Thursday introduced H.R. 5038, the Fair Access to Credit and Job Creation Act, legislation that would repeal the Community Reinvestment Act (CRA). Hensarling criticized CRA in remarks that were made during a Thursday House subcommittee on financial institutions and consumer credit hearing, asking why legislators would “want to force institutions to do what they are already doing.” In addition to remarks from the attending members of the panel, that hearing featured testimony from National Community Reinvestment Coalition President/CEO John Taylor and representatives from various Washington-based interest groups. CRA was enacted in 1977 in response to a practice known as "redlining," which refers to the failure to lend to lower-income and minority neighborhoods by banks and thrift institutions during the 1960s and early 1970s. The purpose of the law is to ensure that for-profit financial institutions adequately meet the financial service needs of all parts of the communities from which they draw deposits. In his opening statement, subcommittee chairman Rep. Luis Gutierrez (D-Ill.) said that legislators should “talk about how to more effectively combat ‘red-lining’… and not about the ‘red herring’ of CRA allegedly causing the current financial crisis.” However, Rep. Ed Royce (R-Calif.) reiterated the criticism of some that that CRA had potential part in creating the ongoing housing market difficulties, saying that “CRA’s mandate that private institutions offer loans they otherwise would not offer contributed to the erosion of credit standards throughout the market.” He called on legislators to cease “giving private entities public missions.” The Credit Union National Association (CUNA) opposes any effort to include credit unions under CRA requirements. CUNA maintains that by their nature and mission of "people helping people," credit unions already meet the financial needs of a broad spectrum of people that fall within their fields of membership, and play an active role in community development and growth. It is not at this time expected that Congress would take vote on a CRA bill this year.


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