ACT TODAY! - STOP BUSH'S PLAN TO DE REGULATE S & L'S

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Building and Protecting Wealth in Communities

Community Reinvestment Association of North Carolina

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STOP BUSH'S PLAN TO DE-REGULATE S & L's - HELP SAVE CRA!

 

 

The Bush Administration's second term assault on legislation that favors

communities over the needs of big business has begun. In their crosshairs is

the Community Reinvestment Act (CRA), enacted in 1977 and strengthened during

the Clinton years. CRA requires banks and thrifts to provide banking services

to low and middle-income neighborhoods.

 

The Office of Thrift Supervision (OTS) is accepting public comment through

January 24, 2005 (regs.comments, include No. 2004-53 in subject

line) on proposed changes that would weaken how CRA is enforced, and now is the

time for concerned citizens to speak out against this ill-conceived proposal.

 

The OTS regulates the nation's thrifts, aka savings & loans (S & L's). In the

fall of 2004, the OTS pushed through another change that weakened CRA. The

agency exempted thrifts with less than $1 billion in assets from having to meet

the most rigorous CRA tests, an increase from the previous level of $250

million.

 

Currently, banks and thrifts are periodically graded to make sure they are

fulfilling their obligations under CRA to serve low & middle income communities.

The CRA exam for large thrifts includes three parts - lending, investment, and

service tests. Under the OTS proposal, large thrifts will be allowed to

eliminate their investment or service tests or decide how heavily they want to

weight each part, as long as lending does not fall below 50% of the total test.

Allowing thrifts to design their own exams makes a mockery of the CRA's intent,

which is to ensure banks uphold their responsibilities to serve all citizens.

 

The OTS' proposed changes to CRA also include a change in the definition of

" community development " to include all development that takes place in rural

areas, including affluent neighborhoods. This is a slap in the face to CRA's

basic purpose, which clearly mandates investments in low and middle income

communities. Under OTS' proposal, thrifts would receive community development

credit for investing in golf courses and other luxury projects located in rural

areas.

 

Letting the thrift industry police itself would put the foxes in charge of the

henhouse. And why tamper with legislation that’s widely heralded as a

success? The New York Times reports that housing groups credit the CRA for

funneling more than $1.5 trillion into low income neighborhoods since its

inception. These investments have funded affordable housing, medical clinics,

and other worthy community development projects.

 

The CRA has changed banks and thrifts for the better by preventing them from

discriminating against poor and minority loan applicants. If CRA is weakened,

banks and thrifts will reduce their commitments to low and middle income

communities. More consumers will be forced into predatory lending traps such as

subprime mortgages, payday loans, and high-priced check cashing services.

 

You can take action to stop these proposed changes to CRA! Express yourself by

sending comment via letter or e-mail to the Office of Thrift Supervision.

Please forward this e-mail to friends, co-workers, or any e-mail listservs you

have access to. Below is a sample letter prepared by the National Community

Reinvestment Coalition (NCRC). For additional research on this issue, see the

following links

 

http://www.ncrc.org/pressandpubs/featureStory.php

 

http://seattletimes.nwsource.com/html/businesstechnology/2002112442_cra08.html

 

http://www.tompaine.com/articles/dismantling_the_dream.php

 

http://www.pbs.org/newshour/bb/economy/july-dec04/community_12-20.html

 

 

 

Comments are due by January 24, 2005. You can e-mail the OTS at

regs.comments, and include the OTS docket number, No. 2004-53, in

the subject line of your e-mail. Or fax a letter to (202) 906-6518. Or mail it

to Regulation Comments, Chief Counsel's Office, Office of Thrift Supervision,

1700 G Street, NW , Washington , DC 20552 , Attention: No. 2004-53. If you

prefer to sign an on-line form letter, go to

http://www.ncrc.org/letters/ots_letter.php

 

Please cc CRA-NC on your e-mailed comments, send to action. If you'd

like to learn how to become more involved with the campaign to save CRA, contact

Erik at (919) 667-1557 or Josh with the NCRC at (202) 628-8866. This is a fight

our nation's communities can't afford to lose.

 

 

 

Sample letter:

 

Regulation Comments - Chief Counsel's Office - Office of Thrift Supervision

 

1700 G St. NW , Washington DC 20552

 

Attention: No. 2004-53

 

To Whom it May Concern:

 

I am writing to oppose your CRA Streamlining Proposal. This proposal

contradicts the purpose of the Community Reinvestment Act (CRA) because it will

significantly reduce the amount of community development financing and basic

banking services in low- and moderate-income communities. You would allow

thrift institutions to design their own watered-down Community Reinvestment Act

(CRA) exams. The thrifts could eliminate the investment and service parts of

the CRA exam, meaning that you would not require them to make investments in or

provide branches to low-and moderate-income communities.

 

Currently, large thrifts with more than $1 billion in assets have a " three

part " CRA exam that consists of a lending test, an investment test, and a

service test. Under your proposal, a large thrift can choose to eliminate its

investment and service tests, and thus only have to pass a lending test. Or it

can choose to have miniscule investment and service tests, meaning that the

lending test counts for virtually all of the total grade.

 

The danger with this proposal is that large thrifts can get away with

neglecting pressing community needs. The " design your own easy CRA exam " option

will increase the amount of abusive payday loans, check cashing, and other high

cost services in low- and moderate-income communities since thrifts will reduce

their provision of basic banking services after implementing their own easy

exams.

 

At the same time, your proposal would allow thrifts to finance community

development of affluent communities, not lower income neighborhoods, in rural

areas and areas afflicted by natural disasters. This is contrary to the purpose

of CRA to combat redlining of low- and moderate-income communities.

 

Please withdraw your proposal. If you have any questions, please call me at

_______________ (OTS is asking that e-mail comments include phone numbers).

 

Sincerely,

 

Your name and organization

 

cc Community Reinvestment Association of North Carolina (CRA-NC)

 

 

 

sample letter in pdf

 

 

CRA - Background & Purpose of the Community Reinvestment Act

The Community Reinvestment Act is intended to encourage depository institutions

to help meet the credit needs of the communities in which they operate,

including low- and moderate-income neighborhoods, consistent with safe and sound

banking operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and

was revised in May 1995

 

The CRA requires that each insured depository institution's record in helping

meet the credit needs of its entire community be evaluated periodically. That

record is taken into account in considering an institution's application for

deposit facilities, including merges and acquisitions. CRA examinations (see

Exam Schedules) are conducted by the federal agencies that are responsible for

supervising depository institutions:

 

* Board of Governors of the Federal Reserve System (FRB)

* Federal Deposit Insurance Corporation (FDIC)

* Office of the Comptroller of the Currency (OCC)

* Office of Thrift Supervision (OTS).

Recently, CRA-NC has focused on lending and reinvestment in rural areas and the

impact of bank branch closures on local communities.

 

 

 

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