[Congressional Record Volume 141, Number 167 (Thursday, October 26, 1995)]
[Extensions of Remarks]
[Pages E2057-E2058]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              THE WIPE OUT OF THE CRA IS A BAD INVESTMENT

                                 ______


                         HON. HENRY B. GONZALEZ

                                of texas

                    in the house of representatives

                       Thursday, October 26, 1995

  Mr. GONZALEZ. Mr. Speaker, I am compelled to comment on some of the 
provisions in this ill-conceived bill that embody recommendations of 
the Committee on Banking and Financial Services.


                     The Community Reinvestment Act

  The bill before us contains a gratuitous and needless attack on the 
Community Reinvestment Act [CRA]. Without directly repealing the CRA, 
the bill nonetheless wipes out the CRA. It is clear that the less than 
$30 million in savings achieved by these amendments to the CRA is not 
the reason, they were contained in the Banking Committee's 
recommendations--In fact, the committee exceeded its budget targets by 
billions of dollars. The amendments' inclusion in the reconciliation 
package was part of a failed scheme by the chairman to free another, 
wholly unrelated piece of legislation from these gutting amendments 
because they were sure to incur a veto.
  The CRA is a law that simply requires regulated financial 
institutions to help meet the credit needs of the communities they are 
chartered to serve, including low- and moderate-income communities. It 
is reported that this law has resulted in the infusion of $60 billion 
into credit-starved communities across our Nation.
  As a result of complaints from the banking industry about the burden 
of demonstrating compliance with the CRA, President Clinton ordered the 
regulators to revise CRA regulations, with an emphasis on performance 
over paperwork. After a nearly 2 year effort by the Federal Reserve 
Board, the Office of the Comptroller of the Currency, the Federal 
Deposit Insurance Corporation, and the Office of Thrift Supervision the 
regulations have been issued and have just gone into effect. Each of 
these regulators have objected to the committee's action to destroy the 
CRA. Clearly, we should give these regulations a chance to work before 
we reevaluate the CRA.
  Most importantly, at a time when this Congress is slashing the 
funding that has assisted low- and moderate-income Americans, it is 
critical that we save a tried-and-true program that relies on private 
dollars. To do otherwise would be tragic for communities across this 
country. Moreover, to dismantle the CRA under the ruse that it is a 
necessary measure to save money is simply shameful.


                           Housing Provisions

  The lion's share of the committee's savings comes from affordable 
housing programs in the Republican majority's relentless political 
pursuit of savings at the expense of our Nation's low-income families.
  The bill before us gratuitously wipes out the Resolution Trust 
Corporation [RTC] Affordable Housing Programs for a paltry $31 million 
savings--again a savings that is completely unnecessary to meet the 
targets of the Banking Committee for budget reconciliation. This home 
ownership program has been a real success story for the RTC. More than 
104,000 dwellings have been sold at a value of $1.5 billion under the 
RTC Affordable Housing Program, providing shelter to hard-pressed 
working families of modest means. Although the 

[[Page E2058]]
RTC shuts down after this year, there will still be properties to 
dispose of after December 31. Once the RTC is shut down, these 
properties and the Affordable Housing Program will be transferred to 
the Federal Deposit Insurance Corporation. To wipe out this program 
will have serious consequences for low-income family home ownership 
opportunities far beyond the meager savings gained, particularly as 
direct Federal spending for affordable housing dwindles.
  The bill also will permit HUD to sell all HUD-owned multifamily 
property without providing tenant protections or making any effort to 
preserve affordable housing. Last year we made significant reforms to 
the multifamily property disposition program with an overwhelmingly 
bipartisan vote of 413 to 9. The reforms balanced the need to preserve 
affordable rental housing, protect low-income tenants from displacement 
and outlandish rent increases, accelerate the property disposition 
process and save the Federal Government as much as $475 million. 
Nothing has changed since then. The committee's contribution to 
reconciliation saves more than enough money without including the 
virtual repeal of the Multifamily Property Disposition Reform Act and 
without harming low-income families who will surely be displaced with 
no assistance and no place to go.
  Finally, the bill requires section 502 single family rural housing 
borrowers to repay Federal subsidies at the time a home is refinanced. 
While I concur with the requirement that borrowers repay Federal 
assistance at the time of sale, I believe that the provision in the 
committee recommendations provides the best evidence yet that we are 
engaging in policy by the numbers. Simply to raise $39 million from 
low-income families, this bill would discourage families from 
graduating from a federal loan program. A low-income family which has 
scrimped and saved to purchase a home in our rural communities may be 
forced to pay not only the principal and interest on a refinanced first 
mortgage, but would have to pay at least interest on the interest 
credit subsidy that would now be recaptured upon refinancing.
  Like so much else about this bill, much of what is in the banking 
title makes no sense and is indefensible from any reasonable point of 
view.

                          ____________________