[Congressional Record Volume 145, Number 90 (Wednesday, June 23, 1999)]
[House]
[Pages H4815-H4821]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     THE COMMUNITY REINVESTMENT ACT

  The SPEAKER pro tempore (Mr. Deal of Georgia). Under the Speaker's 
announced policy of January 6, 1999, the gentleman from Minnesota (Mr. 
Vento) is recognized for 60 minutes.
  Mr. VENTO. Mr. Speaker, I have taken this hour special order this 
evening to highlight an important law and an important policy that has 
existed since 1977 with regard to financial institutions, with regard 
to banking. It is called the Community Reinvestment Act.
  What this law and policy that has been in place for these 22 years 
accomplishes is it requires that banks go through an examination of the 
nature of loans, not the nature but the place that they actually make 
credit available in their community.
  Most banks, whether they are chartered by our national government or 
by our State governments, receive a franchise. They receive an area in 
which they can do business. Of course, those geographic areas have 
changed greatly as the nature of our economy and population has moved 
across the landscape of our Nation. But the fact is that they receive 
certain benefits from that franchise of banking.
  One is, for instance, that they receive support from the license from 
the State or the national government to do a banking business which 
fundamentally means they can take in deposits and they can in fact loan 
out on a money multiplier basis multiples of what they actually have 
taken as deposits. In the event that they need dollars, the Federal 
Reserve Board has an open window that they can of course, on a short-
term basis, borrow at very low-interest rates from.
  Furthermore, of course, the deposits now that are within that 
institution, that are placed there by individuals from across the 
country, their savings, are in fact, of course, insured by the Federal 
deposit insurance corporation under a number of different programs.
  So these are substantial benefits in terms of actually a license to 
be in the business. It sets up a relationship between our national 
government and State governments and the free marketplace. It has been 
very successful.
  Our model of banking grows out of the egalitarian roots of the times 
of Thomas Jefferson, and of course there are many efforts during the 
first century of our Nation's existence in which banking did not work 
out as successfully as we would like, so coming to this model was very 
difficult.
  Of course, as in the course of most economic activities, banking has 
changed greatly over the years. In 1977 it was apparent that credit 
needs were not being met in some of the local communities, whether they 
be urban communities or rural communities. So then Senator Bill 
Proxmire from Wisconsin in 1977 was able to enact something called the 
Community Reinvestment Act, which provides, as it were, an examination 
of meeting local credit needs of the community in which these banks 
exist, the geographic area, and of course in a practical sense the 
areas that they serve and which they draw deposits from especially.
  Lo and behold, through many years that examination process developed. 
There is one thing that banks probably do not like and probably do not 
really think that they need and that is more regulations. To be candid 
about it, I think that the early laws and rules that tried to implement 
CRA did in fact present more regulations. I do not think there is any 
banker or any citizen, for that matter, that would like to see more 
regulatory burden.
  But the fact was that over the years that has not been a hindrance. 
As this law has developed and has been serving our country, the fact is 
that the regulators have accomplished and streamlined many aspects of 
the Community Reinvestment Act.

                              {time}  1930

  One of the most important legislative changes occurred in 1989 when 
then

[[Page H4816]]

Congressman Joe Kennedy added an open disclosure provision to CRA; and 
since then, it has really, I think, taken off and come to significant 
attention in terms of the public.
  As that has happened, there has been a new awareness and new impetus 
upon making this law even more effective than it was. There are a 
couple of factors that have influenced that. One is, increasingly, 
banks do not have as many deposits as other financial institutions that 
are nonbanks. It is estimated that in 1977, when this law was first 
passed, that about two-thirds of the savings and deposits existed in 
our financial institutions, our banks and in our savings and loans or 
thrifts.
  Today, it is estimated that that amount may be something less than 30 
percent, less than half of what one time existed. The necessity is, of 
course, to try to keep existing CRA law in place.
  If we look at CRA, since its inception, it is estimated that nearly 
$1 trillion in loans and creditworthy instruments have been extended to 
these communities in which these financial institutions exist under the 
auspices of fulfilling the CRA requirements, which only requires banks 
to loan to creditworthy customers in these geographic and other service 
areas in which they exist.
  It does not require financial institutions to make loans or take 
activities which, in essence, would cause them to lose money, to issue 
bad loans, or to issue services that would be inappropriate, that would 
be costly to them.
  As a matter of fact, of course, I think, after the history of this is 
actually demonstrated, that some banks, which were perhaps reluctant to 
in fact make these types of loans initially, they have now discovered 
an entirely new book of business in terms of serving these communities.
  The consequence has been dramatic in terms of expanding opportunities 
for some low and moderate-income people and, in some cases, people of 
color that before had been denied credit.
  I think that most folks from the rural area well understand what the 
limitations are concerning credit in their own communities. After all, 
without the credit extension for loans in farms and ranches and, for 
that matter, in the urban areas, the small businesses in those cases 
would not be able to grow, would not be able to have the ability to in 
fact engage actively in the enterprise that they have chosen to 
participate in.
  But CRA has meant that that type of credit, that that test, that type 
of examination falls upon these financial institutions to actually 
serve the community.
  So, often, the demonstration where there had been problems with CRA 
was a case where the deposits came in from the local community, but the 
dollars and loans did not go out to that same local community, even 
though there were creditworthy applications and loans that could have 
been made in those cases.
  What CRA has done has caused banks, in a partnership I would say, 
more than anything else, to reexamine what they are doing, not just to 
become a deposit collector and then a purchaser of bond or securities 
or, in fact, even investment in other investments that maybe were not 
even within the borders of the United States, but might have been in a 
territory or someplace else where the interest rates might have been a 
little higher, the fact was that it has caused them to reexamine what 
they are doing and to reorient their business.
  Now, we hold our financial institutions in this country out as being 
international, as being aware, and being involved. But most 
importantly, as we go forward, we want to make certain that the basic 
needs are met at home as they are justified.
  CRA is now of course under attack. It is ironic, as we move to pass 
legislation which would modernize our financial institutions, that some 
have sought to attach to this banking modernization legislation 
provisions which would renege and which would withdraw, or at least 
take away, the commitment and the examination that exists under CRA.
  To date, in the House, we have been successful in fighting off most 
of those in this session but in past sessions, indeed amendments have 
passed on this floor which have, in fact, pulled the rug out from under 
this law, this CRA law that is working and serving our families and 
serving our Nation so very well these last 22 years.
  But in the Senate of course, they have, in fact, pulled back the 
requirements of CRA and in essence pulling away at the same time, I 
might say, that we are providing for financial modernization.
  Well, one, financial modernization must indeed serve, not just the 
needs of the financial entities, that is banks, the insurance 
companies, and security firms, we must keep in mind that and focus, and 
the major focus should be on the people of this country that are served 
and the small businesses that need the type of help that only these 
financial institutions can offer. That in fact is the reason that of 
course we have in the first instance developed and provided the type of 
franchise and license that they have within our States and within the 
boundaries of this Nation.
  So now more than ever, as we move to provide for these banks to have 
more opportunities and more powers to work together, we also need to be 
certain that the basic needs, the basic finance needs, the basic credit 
needs of our local communities are available for the small businesses, 
are available for home purchases, are available to serve, that they 
merely do not take the deposits and investments out of a community, 
but, in fact, they extend to that community the type of credit needs 
that are essential for a viable economy in our urban areas, in our 
rural areas, and in many others.
  In my state, we have 550 banks. Nationwide, we have only 9,700 banks. 
So Minnesota disproportionately has about 5 percent of the banks. But 
many jurisdictions, there are not as many banks.
  So it is very important that in fact the banks that are there are in 
fact taking up the responsibility and that they have in fact accepted, 
when they accepted the franchise, to serve these needs.
  I see some of my colleagues on the floor this that I know are 
interested, as I am, in maintaining this important community 
reinvestment act law.
  Mr. Speaker, I yield to the gentleman from New York (Mr. LaFalce), 
the ranking Democrat on the Committee on Banking and Financial 
Services.
  Mr. LaFALCE. Mr. Speaker, I thank the gentleman from Minnesota very 
much for yielding to me.
  Mr. Speaker, I am so pleased to join the gentleman from Minnesota 
(Mr. Vento), who has been a real champion of financial services reform, 
of housing and community development, and most especially of the 
Community Reinvestment Act.
  There have been great successes with respect to the Community 
Reinvestment Act. Possibly within the next week, surely if the House 
passes a financial services reform bill, surely in conference with the 
Senate, we are going to have to take up the issue of CRA. We ought not 
backtrack on our commitment to the Community Reinvestment Act one iota.
  Now, some within the United States Congress may seek to portray the 
CRA as an impediment rather than as an incentive to sound banking 
practice. They are absolutely wrong. The Community Reinvestment Act has 
resulted in a tremendous amount of capital investments in our 
communities. It is the Community Reinvestment Act that has caused that 
investment in our community.

  As the gentleman from Minnesota (Mr. Vento) said, this law was passed 
by the Congress in 1977. There was a reason for it. To combat 
discrimination by encouraging federally insured financial institutions 
to help meet the credit needs of the communities they serve.
  When we view the 2 decades plus that have passed since 1977, we can 
say that it has been a resounding success. Its success results from the 
effective partnerships of municipal leaders, local development advocacy 
organizations, and community minded financial institutions. Working 
together, the CRA has proven that local investment is not only good for 
business, but critical to improving the quality of life, especially for 
low and moderate-income residents in the communities financial 
institutions serve.
  We can applaud the financial institutions for the work they have done 
in meeting the CRA requirements, the

[[Page H4817]]

 CRA obligations. At present, it is estimated that almost 98 percent of 
all financial institutions have achieved at least a satisfactory or 
better CRA compliance rating. So obviously it is not that difficult of 
a requirement if 98 percent of the institutions are being rated at 
least satisfactory.
  In my own district, for example, CRA loans have led to the 
development, one example, of 138 units of low-income senior housing as 
well as permanent financing for a group home for the developmentally 
disabled. Local banks participate in the Buffalo Neighborhood Housing 
Services Revolving Loan Fund, the Niagara Falls Housing Services 
Revolving Loan Fund, et cetera. These enable local neighborhood housing 
service agencies to acquire and rehabilitate numerous vacant properties 
and resell them to low and moderate-income constituents.
  CRA lending by local banks in my district has also lead to job 
growth. For example, local banks have worked with the minority and 
women-owned loan program of western New York to create pro bono 
counseling and monitoring services to minority and women loan 
applicants during the pre-application and post-loan periods of a new 
business.
  In addition, CRA lending has resulted in the construction and 
financing for manufacturing facilities, which resulted in the retention 
of hundreds of jobs, the creation of hundreds of jobs in Niagara, Erie, 
Orleans, and Monroe County.
  Mr. Speaker, I strongly support the Community Reinvestment Act and 
the successes achieved in combatting discrimination. I applaud our 
financial institutions for their strong compliance record. I welcome 
their continued success. I repeat, we will pass no banking legislation 
in this Congress if there is even a scintilla of a retreat from the CRA 
commitment.
  Mr. VENTO. Mr. Speaker, I thank the gentleman from New York (Mr. 
LaFalce) for his strong statement, the ranking member of the Committee 
on Banking and Financial Services.
  I also would point out that, as he read the recognition in Buffalo, 
New York, his hometown, of the accomplishments, that CRA accomplishes 
all this without any Federal grants of dollars, without any taxation 
passed. It accomplishes all of that simply by permitting banks to do 
what banks are supposed to do, to loan money to creditworthy 
individuals. That is the only test here, and to be certain that that is 
done in the jurisdictions or service areas in which they are doing 
business.
  It is, I think, very important to understand that this is what banks 
are expected to do, why they are licensed. They have a franchise. This 
is a law and a policy that is working, that has reoriented, that has 
helped banks focus on the major impetus and the nature of the business 
that they are involved and so fundamental to the working of our 
economy.
  Mr. Speaker, I am happy to yield to the gentleman from Pennsylvania 
(Mr. Kanjorski), the ranking member on the Subcommittee on Capital 
Markets, Securities and Government Sponsored Enterprises, a good friend 
and a strong supporter of CRA.
  Mr. KANJORSKI. Mr. Speaker, I rise today in support of what the 
gentleman from New York (Mr. LaFalce), our ranking member, has stated 
and what the gentleman from Minnesota (Mr. Vento) has stated.
  But I want to give a different perspective. I am sure that the people 
that are observing this discussion tonight may be asking some very 
fundamental questions, like what is the responsibility of government to 
get involved in the banking business and tell them what they have to do 
with their money? I want to give just some concrete examples as to why 
we derive that authority and why it is important.
  Banking institutions are licensed in the United States, and they 
derive two great measures of support from the American people. That is, 
one, that the deposits made in national and insured banks in America 
are insured by the full faith and credit of the United States, so that 
every individual who makes a deposit in an American bank up to $100,000 
is absolutely certain that regardless of the economic circumstances 
that may occur in this country their money is secure and receivable by 
them on demand.

                              {time}  1945

  So the insured deposit feature is unique. In no other instance that I 
am aware of does government insure the private sector's potential 
losses so that their customer, the bank, can be satisfied that their 
money is not at risk.
  The second factor and special opportunity that is offered to banks 
that is not offered to other private businesses in America is the fact 
that they have the right to use the open window at the Federal Reserve 
for drawing down funds to maintain solvency. No other institution that 
I am aware of can draw funds at Federal Treasury rates in order to see 
that their liquidity remains constant and sufficient to carry on the 
success of their business, particularly at those times when the economy 
gets out of whack and there may be a run on a bank or there may be an 
unusual demand or a need for funds. The bank knows that it can go to 
the open window and derive those funds and that the open window issues 
those funds because the United States Treasury stands behind them.
  Now, that is the reason why we have a unique set of circumstances 
that allows the Congress to work with the private sector, the banking 
institutions, as to how they can better serve the community.
  Quite frankly, it was my opinion that Community Reinvestment Act 
provisions were not working very well in the beginning. And as I 
traveled around my district and traveled around the State of 
Pennsylvania and the Nation and I talked to bankers, there was a great 
deal of discomfort with CRA. And their discomfort was that there was a 
great deal of documentation required in order to satisfy the process 
and that performance or the process of documentation was extremely 
expensive to the banks.
  I remember on one occasion being asked to come by a small bank run by 
a friend of mine, Paul Reichart, at Columbia County Farmers National 
Bank in Columbia County, Pennsylvania, and he led me in to meet with 
his counsel and some members of his board and himself, and a table much 
like the size of the table I am speaking from now was piled about a 
foot high with material. What he expressed to me was the little bank in 
Columbia County, Pennsylvania, had to go through all this documentation 
in order to comply with CRA.
  I believe, if I recall correctly, it was 1991. And the cost of that 
compliance was about $55,000. They were disturbed. And the argument, 
made very simply, was that as a small community bank, why do we have to 
spend all this money that is directly off the bottom line to document 
compliance with an act of Congress when, in fact, we could not survive 
if we were not making loans, primarily to the community and to the 
participants that surround us within a very small radius, maybe 30 
miles. I thought they had a strong logical argument.
  As a matter of fact, based on their argument, I came back to 
Washington and prepared an amendment in 1991 that I offered to some of 
the banking acts that were going through at that time which would have 
exempted small institutions of less than $100 million in assets from 
CRA documentation requirements. At that time, the amendment did not go 
through, and no progress was made and frustration continued to exist 
for at least another year. But, luckily, the new administration of 
President Bill Clinton recognized that problem and, primarily as it 
applied to small banks, and it directed a reform of the situation.
  The President directed the then-Comptroller of the Treasury, Gene 
Ludwig, who did a comprehensive interagency review and reform of CRA. 
And what he did basically reinvent and streamline the entire process of 
documentation and performance and, as a matter of fact, laid down the 
condition that it was no longer the documentation that was important it 
was, instead, the performance that was important. And on the basis of 
that, now banks with little documentation and little expense, 
regardless of their size, can comport with the standards in the 
Community Reinvestment Act to be assured that there is satisfaction and 
compliance.
  And as my friend, the gentleman from New York (Mr. LaFalce) just 
stated, 98 percent of the banks in the United States today are in 
satisfactory

[[Page H4818]]

compliance at much less cost because of the reforms made under Ludwig's 
administration as Comptroller of the Currency.
  Today, as I travel around banks in Pennsylvania and the Nation, I do 
not hear the horrendous stories or complaints. As a matter of fact, I 
find now a new partnership has arisen between community banks and 
larger banks and the communities they serve. They are reaching out in 
ways they have never reached out before and are performing in ways they 
have never performed before.
  Now, I have to be thorough in my disclosure, because before I came to 
Congress I had the opportunity to serve on a small community bank board 
of directors, and I know that it was extremely difficult at that time 
for small banks and small boards of that nature to answer to big 
government in Washington as to what could get done. But with the 
reforms that Mr. Ludwig put into place, that very bank today is 
operating, and when I talked to the President not more than a month 
ago, he is very satisfied and actually seeking out community 
reinvestment loans wherever they can happen.
  So from the smallest community bank to the largest regional banks to 
the largest national banks the process has been changed, focusing away 
from documentation and focusing more on performance and ease and speed 
and less cost and less conflict in arriving at the standards to satisfy 
these requirements.
  I think, now, in 1999, there is really not a sane, logical argument 
that can be made that in any way do Community Reinvestment Act 
requirements prohibit the private banking system or cause it any great 
cost or exposure, but in fact has made them address that return; that 
banks are private businesses but also the holders of great benefits 
from the licensing of their bank by the insurance they have in deposits 
and by access to the open window. They now know that they can perform 
even something better for their community by being a good citizen.
  And quite frankly, I would like to take the time to congratulate 
these banks, the community banks, the regional banks and the large 
banks. Over the last 8 years, since I drafted that amendment, I think 
they have made major strides, proving that smart reinvented government, 
as instituted under President Clinton and Gene Ludwig, when he was 
Comptroller of the Currency, have really established a program, cleaned 
away the problem areas, and have led to real participation.
  Let me mention some of that participation. In 1997, banks and thrifts 
subject to CRA reporting requirements made $2.6 million small business 
loans totaling $159 billion. And they also made $18.6 billion in 
community development loans and investments.
  This is an incredible record of the private sector of America 
recognizing that in conjunction with a cooperative regulator and with a 
policy established and enunciated by this Congress that the public's 
interest can be well served to the benefit of not only the government 
and the regulators but to the communities across America. Thousands of 
new jobs have been created all over America and in distressed 
communities.
  And I happen to look at CRA now from an entirely different viewpoint. 
This is one of the arrows in our quiver to meet the distressed areas of 
America in offering opportunities for community development 
and economic development in the place that really counts and with the 
private sector participation in market forces to make better judgments 
of economic development money than the government could ever make on 
its own.

  This is not a panacea. This does not solve all our problems, but it 
certainly does show that a government program, properly administered, 
properly defined and judged on performance and not documentation alone, 
can in fact, change the opportunities, both economic and community 
opportunities, of many millions of American citizens.
  So tonight, I come to the Congress to join my friend from Minnesota 
(Mr. Vento).
  Mr. VENTO. Mr. Speaker, reclaiming my time, and not to cut the 
gentleman off, but to have him as an ally, I must say that the anxiety 
that he created by challenging CRA has, I think, in that legislation 
that was proposed some decade or so ago, has actually been turned into 
a motivation. Because I think the gentleman from Pennsylvania, as 
always, was operating in very good faith and is of quite a significant 
ability. And I think the result has been that, as he pointed out, that 
Gene Ludwig and the other regulators were brought to the table, 
including the Federal Deposit Insurance Corporation and the office of 
Comptroller of the Currency, as well as the Federal Reserve Board, who 
are now all strong proponents of CRA.
  In streamlining the process, we made it easier for smaller banks to 
comply and able to deliver the tremendous results in 1996 that the 
gentleman talked about. We are talking about hundreds of billions of 
dollars of investment. That means homes, that means jobs. Obviously, a 
good economy has helped, but, clearly, CRA is meeting those local 
needs. It is a great success, even if Congress did have something to do 
with crafting the policy and perhaps perfecting it and getting an 
administration that frankly has operated in good faith. Instead of 
fighting this, this administration decided to use it and to shape it 
and to craft it so it would serve working families across this Nation.
  So I thank the gentleman from Pennsylvania (Mr. Kanjorski), and I 
welcome my colleague, the gentleman from Vermont (Mr. Sanders), who is 
an able member of our committee and a strong advocate of CRA and 
consumer law generally, and I yield to the gentleman.
  Mr. SANDERS. Mr. Speaker, I thank the gentleman from Minnesota (Mr. 
Vento) very much for organizing this special order, and I want to go on 
record in agreeing with the remarks that the gentleman has made, as 
well as the comments of the ranking member of the committee, the 
gentleman from New York (Mr. LaFalce), and the gentleman from 
Pennsylvania (Mr. Kanjorski). I think what they had to say is 
appropriate, and I am in agreement with it.
  Mr. Speaker, we see on the television virtually every night and we 
read in the newspapers that the economy is booming, and some people say 
it has never been so good. But when I speak to working families in the 
middle class in the State of Vermont they have a slightly different 
interpretation of what is going on in the economy. Because for many of 
those people, they are working longer hours for lower wages than they 
were 20 years ago. And while we are all delighted that Bill Gates saw a 
$40 billion increase in his wealth last year, that is really not the 
case for most the people in the State of Vermont. They are struggling 
hard to keep their heads above water.
  One of the major problems we face in the State of Vermont has to do 
with affordable housing. If anything, that crisis is becoming more 
acute not only in my State but in States throughout this country. So it 
is very clear to me that one of the important tools that we have to 
build affordable housing, and to have the banks throughout this country 
play a responsible role in their communities is what we have done 
through the Community Reinvestment Act, which, in fact, is working 
extremely well in this country today and which must not be weakened.
  I would agree with the gentleman from New York (Mr. LaFalce) in his 
remarks of a few moments ago that if CRA is weakened, we should not 
pass any banking legislation that does that, and I would strongly urge 
the President to veto any legislation which weakens CRA.
  Mr. Speaker, I recently took part in a ribbon cutting celebration to 
commemorate the successful redevelopment of the Applegate Housing 
Development in Bennington, Vermont. The successful redevelopment 
project involved the efforts of many good people and organizations, 
including the residents, who in fact came together through a strong 
tenants' association. A nonprofit housing developer, civic leaders, the 
people in Bennington and their local government played a very positive 
role in this effort, as well as government officials and local banks. 
And the CRA was a vital part of that effort.
  Until recently, Applegate was an apartment complex where the plumbing 
water backed up into the bathtubs, vacancy rates exceeded 50 percent, 
and crime was a serious problem. Today,

[[Page H4819]]

Applegate is a completely renovated community where families can live 
in peace and comfort and children have the kind of opportunities to 
which they are entitled.

                              {time}  2000

  The truth of the matter is that the State of Vermont has a network of 
excellent community banks that is working with local nonprofit housing 
developers to build and rehabilitate housing for the benefit of low- 
and moderate-income families. CRA helps them make an important part the 
American dream, a decent and safe place to live accessible to all 
Vermont.
  The CRA encourages federally insured financial institutions to 
provide deposit and credit services throughout the communities in which 
they do business, including low- and moderate-income areas, and it is 
working. I think that there should not be major disagreement in this 
body that we simply do not want to see banks lend to institutions and 
businesses that are running off to Mexico or China and investing in 
those countries. We want to see banks reinvest in our communities. And 
that is what the CRA process is about.
  The CRA is helping to rebuild the economies of the stressed 
communities. It is making homeownership accessible to more Americans. 
It is helping to start small businesses and to create decent paying 
jobs. Since it was passed in 1977, CRA is credited with lending $1 
trillion in loans to low- and moderate-income communities. And this is 
a significant achievement.
  CRA is good for consumers, and it is good for communities. It is also 
good for the banking business because it encourages financial 
institutions to look for business opportunities they might otherwise 
miss.
  Mr. Speaker, as I mentioned earlier, not everyone in our society is 
benefiting from the growth in our economy. An estimated 10 million 
Americans lack decent, affordable housing. It is not uncommon in the 
State of Vermont and, I dare say, in Minnesota to find families paying 
40, 50 or more percent of their limited income for housing. That is not 
affordable housing.
  In rural America, more than 9 million people are living in poverty. 
Rural communities across the country cannot get the development funds 
or the consumer credit they need, and in urban areas the lack of 
affordable housing leaves more and more working Americans without 
homes.
  Instead of dismantling the CRA, as some in Congress would have us do, 
we must strengthen it. Congress is once again considering a bill to 
quote, unquote modernize the financial services system. But that bill 
fails to modernize the CRA to preserve its effectiveness in the 
changing financial system. The changes taking place in today's 
financial marketplace threaten to make it even more difficult for low- 
and moderate-income families to get the bank services they need and 
deserve. Without access to private capital that the CRA provides for 
low- and moderate-income consumers and communities, homes will not be 
renovated, small businesses will not be started, new jobs will not be 
created, and neighborhoods will not be rebuilt.
  We need to save the CRA from those in Congress who would tear it 
down. I urge my colleagues to resist any effort to weaken the CRA.
  Again, I want to thank the gentleman from Minnesota (Mr. Vento) for 
his leadership role in this.
  Mr. VENTO. Mr. Speaker, I thank the gentleman from Vermont (Mr. 
Sanders) for his poignant comments with regards to this.
  As we look at a successful economy today with low income rates, at 
least we hope for the near future, and with high employment and low 
inflation, and the gentleman reminds us all again that while these 
numbers look very good in some folks' view, the fact is that nobody 
lives on the average. I think we want to come forward together.
  One of the things that CRA has done is to try to reach back and to 
pull up those in our society that have not had the opportunity. We hold 
forth the promise in this Nation that is we work hard that we can get 
ahead, that we are going to be treated fairly. And of course an 
essential part of that is to have employment, to have a fair wage, and 
to have a fair opportunity to participate in the economy to achieve the 
American dream.
  I must say that this administration has, by virtue of its goals and 
by virtue of the economy, been successful in achieving that. For the 
first time in our history, 67 percent of the families in our nation 
have homeownership.
  That still, of course, leaves out many of those that do not. And, of 
course, we are experiencing higher rents and all sorts of housing 
programs. But CRA specifically addresses housing. One of the 
statistics, for example, is that from 1993, I believe these statistics 
are through 1998, African-Americans homeownership mortgage loans 
increased by 58 percent and those to Hispanics by 62 percent and to 
low- and moderate-income borrowers by 38.
  So the low and moderate market was getting a 38-percent increase. And 
we can see the African-American population and the Hispanic population 
greatly exceeded that, which I think indicates that in fact the CRA 
efforts tailored and targeted to meet and to try to serve those 
communities are very helpful.
  Now, there are many aspects that have happened simply because CRA has 
acted as a catalyst. In other words, the necessity is that banks need 
to do this and they are looking for creditworthy, sound business 
decisions to make in their local communities and that precipitates 
other organizations to come forward, whether they are community 
development corporations, whether they are local governments, whether 
they are faith-based organizations, whether they are neighborhood 
housing services, some of the very laws that we put in place.
  One, of course, is the Neighborhood Reinvestment Corporation, which 
has set up a goal over a period of years to in fact provide 25,000 new 
homeowners by 2002. And they are almost halfway there. And just to read 
the numbers, the median income for participating families is about 
$25,000. And that is 36 percent below the national median income. The 
Neighborhood Reinvestment Corporation, 67 percent have very low incomes 
and 26 percent have moderate. So here they are meeting these needs. But 
they condition do it without the seeds.
  We have some folks who for a long time the national Government 
provided housing programs which they paid for building it, maintaining 
it, paid the subsidies, paid to keep it repaired. And it produced some 
pretty good housing. Much of it still exists, as a matter of fact, and 
it is not being threatened by the opt-out. But there are a lot of 
Members here on the floor and some other places that think all we have 
to do is provide the fertilizer. And I would suggest that we need these 
seeds. And the seeds that make these housing programs grow are the CRA 
provisions, are these small programs in local organizations.
  That is why local communities such as our mayor organizations, the 
counties, the States all are strong proponents of the Community 
Reinvestment Act. It works. It is a great success. And it is an 
insurance that banks will be questioned as to whether they are meeting 
those local needs and serving those working families and their service 
areas need to be served. So it is a tremendous success.
  It is a fact, of course, that many now I think belatedly based on 
perhaps past problems or impressions that they have seek to try and 
erode this important consumer law, this important focus that we have 
established for financial institutions.
  Mr. Speaker, I yield further to the gentleman from Vermont (Mr. 
Sanders).
  Mr. SANDERS. I would concur with what my friend from Minnesota said. 
But the bottom line for me is that in this great and wealthy country, 
we should be outraged that so many millions of families are still not 
latching on to the American dream despite the fact that they are 
working long and hard hours. Clearly an essential part of what the 
American dream is about is to have a decent house in a decent 
community.
  We should also understand that, if my memory is correct, the banking 
industry right now is enjoying record-breaking profits. And I think, as 
the gentleman from New York (Mr. LaFalce) made very clear, because of 
acts of the United States Congress, banks have certain benefits, among 
other things, the FDIC, which guarantees the money that is in those 
banks.

[[Page H4820]]

And banks, therefore, have a responsibility to their communities and 
many banks understand that.
  But essentially, if this institution, the Congress, is to mean 
anything, we have got to stand up for those people who are not earning 
huge sums of money, those people who are not living on the mansions on 
the Hill. We have got to address the needs of senior citizens and 
working families who are paying 40, 50, 60 percent of their limited 
incomes for housing.
  As my colleague the gentleman from Minnesota (Mr. Vento) indicated, 
the CRA in fact has been an extremely successful program. It has done 
what it is supposed to do. It has created affordable in Vermont and 
throughout this country. It has helped small business create decent 
paying jobs.
  We must stand firm against anyone in this institution who wants to 
weaken a program that has worked so well for working families in this 
country.
  Mr. VENTO. Mr. Speaker, I would point out that today many large 
financial institutions have in fact developed departments and units 
within their banks that are called CRA units. So they are actively 
engaged.
  The phenomenal effect of this law has changed in a sense the 
corporate structure of banks. So where before they might have been more 
interested in loans in the Grand Cayman Islands or some other exotic 
place, which obviously they thought they could make money with, and 
there is nothing wrong with profits, nothing wrong with financial 
institutions making money, but the fact is that we also want them to 
serve these communities. And so they have developed within their 
corporate structure offices that specialize in meeting these needs.
  So within our large financial institutions and some middle-size 
institutions, they actually have assigned this responsibilities with 
officers that exclusively work on community reinvestment activities and 
they have discovered, lo and behold, they can make money out of that 
part of the portfolio. And so with small banks I think they have a 
phenomenal record.
  I am looking at one small bank from my community called the 
University National Bank, and the comptroller has given them great 
credit, but I just want to give the gentleman from Vermont (Mr. 
Sanders) and my other colleagues an idea that the percentage of CRA 
loans in their portfolio in 1994 was only 14 percent. In 1995 it was 38 
percent of the portfolio. In 1996 it was 60 percent. And in 1998, it 
is, get this, 75 percent. It is inner city bank that was not acting 
much like an inner city bank. It was not an active participant in the 
community. This is just one example.
  I know that I have Western Bank in my area that is headed by a 
friend, Bill Sands, this is president, long-time name in Minnesota, and 
is doing an excellent job both in terms of economic development and in 
terms of mortgage lending.
  So many of these small banks, even their organizations, for instance 
today the American Banking Association supports the CRA law. And of 
course their counterpart, which represents a significant number of bank 
and sometimes smaller banks, the Independent Bankers Association of 
America, also supports and recognizes the changes made in the law have 
been helpful.
  Now, individually there are probably some banks that are still in a 
state of denial with regard to this law.
  Mr. SANDERS. Mr. Speaker, if the gentleman would yield further, I 
would comment that those banks that he is referring to I presume are 
not losing money, they are making money and they are making money the 
right way, by reinvesting in their communities.
  I think, not to wander away from the subject at hand, there is a real 
concern throughout this country about the loss of decent paying jobs 
and the fact that big money interests are much more interested in 
investing in China or Mexico to help companies make a quick buck 
exploiting cheap labor in those countries rather than reinvesting in 
the United States, rather than reinvesting in our community.
  What CRA is about, which is so essential and so right, it says 
reinvest in our communities, create new jobs in our communities, start 
small businesses in our communities, give people affordable housing in 
our communities. And you know what, banks? You can make money doing 
that. You do not have to just help people invest in China.
  So I think the gentleman and I are in agreement, the CRA is a success 
story. And I hope very much that no one in Congress wants to come 
forward to dismantle it or to weaken it. And if they do, I hope that 
the President will do the right thing and inform them that any 
legislation which weakens CRA will be vetoed.
  Mr. VENTO. Mr. Speaker, we are going to be certain that the banks 
assume these new responsibilities, that there is an opportunity to 
examine whether or not there is in fact CRA activity that they are 
meeting, that they will have satisfactory rates, and that that rating 
is something that holds up, that CRA rates and exams go on at the same 
time as other exams go on. We want banks to have enough capital. We 
want them to be subject to what we call our CAMEL's rates in terms of 
capital assets management and other liquidity and other factors that 
are so important.
  But also, I think we want them in a sense to say CRA says you cannot 
just be passive, you cannot just be reactive, you have to be proactive. 
And that is exactly what they are doing.

                              {time}  2015

  There are many ways that they can do this. There are in fact new 
aspects where individual companies, entities have sprung up that permit 
banks to buy securities that will help them meet their CRA requirement.
  Supporting home ownership efforts. As the gentleman from Vermont 
knows from our interest in terms of housing, that very often today we 
need to in fact school individuals on what it is to be a homeowner. For 
instance, in my community, I have a large population of Southeast 
Asians that has emigrated from Laos. The fact is that they did not have 
as much information about what it is to be homeowners. Today that is 
turning around. Now we have realtors that are Southeast Asians that are 
Hmong that are in fact selling the homes. We have others of course that 
are buying them. They are going to be a very important part of our 
community. Banks reaching out, working with these communities, trying 
to teach how you become a homeowner. What the procedures are, the 
requirements, how you take care of a home, how you manage the dollars 
and keep it in repair are very important in terms of home ownership.
  We have programs, as an example, that deal with single parent 
families, very often women, and trying to give them the resources and 
the know-how so that they can become homeowners. These are all programs 
that are helped and assisted by CRA, that provide some of the seed 
money for creditworthy types of ventures. We know that if we educate 
and invest in people, that they then have the ability, they may not 
have as much income but they have the ability then to understand what 
is necessary and they may have a network of support very often through 
a neighborhood housing services program, through a church, through 
social activities so that they have the network support that permits 
them to become successful homeowners.
  We are doing the same thing, as the gentleman knows, through the 
community development financial institutions, programs like the PRIME 
program and the Microenterprise programs, all of which depend upon 
banks to come forward after we have built capacity in the communities 
to in fact invite people to become owners of business, to be involved 
in our economy. This is very essential in fulfilling the promise of 
what this Nation is about in terms of earning your own way, the sort of 
rugged individualism. It is fine, but we need to build the types of 
capacity in terms of the people that we represent and the working 
families, which may not be like yesterday's working families, but build 
the capacity so that they can be successful. Our financial 
institutions, have always been an important part of that. Our banks 
have. CRA today is one way of ensuring that they can demonstrate and 
pointing the way, keeping in focus the service to the geographic area 
and the service areas in which these financial entities derive their 
deposits and provide their loans and play that essential role that is 
the magic of our great American economy.

[[Page H4821]]



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