[Congressional Record (Bound Edition), Volume 146 (2000), Part 11]
[Extensions of Remarks]
[Page 15536]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 15536]]

          THE COMMUNITY REINVESTMENT MODERNIZATION ACT OF 2000

                                 ______
                                 

                         HON. THOMAS M. BARRETT

                              of wisconsin

                    in the house of representatives

                        Wednesday, July 19, 2000

  Mr. BARRETT of Wisconsin. Mr. Speaker, and my distinguished 
colleagues, I am pleased to introduce today, in partnership with my 
colleague, Representative Luis Gutierrez, the Community Reinvestment 
Modernization Act of 2000. This legislation seeks to ensure that the 
Community Reinvestment Act (CRA) will remain an effective fair lending 
tool in today's rapidly changing financial services marketplace.
  CRA has played a key role in helping creditworthy Americans gain 
access to credit and banking services. And it has helped banks and 
thrifts discover new markets and profit opportunities they otherwise 
may have overlooked.
  Since 1997, CRA has encouraged banks and thrifts to commit more than 
$1 trillion in private reinvestment dollars for mortgages, small 
business loans and community development loans for traditionally 
underserved communities. In the Milwaukee area alone, CRA has channeled 
over $200 million in lending to low- and moderate-income citizens and 
neighborhoods.
  Unfortunately, CRA will become less effective if it is not updated to 
keep pace with the rapid changes that are occurring in the financial 
services marketplace as a result of the Gramm-Leach-Bliley Financial 
Modernization Act of 1999. While this new law allows banks to merge 
with securities and insurance firms in a new ``holding company;'', it 
does not require that all of a holding company's banking and lending 
products and services be covered by CRA. Essentially, the law creates a 
two-tiered banking and lending industry, with one part being covered by 
CRA and the other part not.
  Insurance and securities affiliates of banks are increasingly 
conducting lending and selling bank-like products. And this trend will 
likely continue to spiral as a result of the new financial 
modernization law. As more and more assets and banking products are 
shifted out of banks and into holding company affiliates that are not 
covered by CRA, the reach of CRA will be reduced to a small portion of 
the Nation's lending activities.
  The bill we are introducing today will update CRA to match the 
increased market powers the Financial Modernization Act creates. In 
addition to extending CRA to all lending affiliates of financial 
holding companies, the CRA Modernization Act will:
  (1) make insurance more available, affordable and accessible to 
minorities and low-income citizens;
  (2) improve data collection for small business and farm loans;
  (3) require a notice and public comment period for mergers between 
banks, insurance and investment companies;
  (4) require that HMDA data also include information on loan pricing 
and terms, including interest rates, discount points, origination fees, 
financing of lump sum insurance payment premiums, balloon payments, and 
prepayment penalties;
  (5) prohibit insurance companies that violate fair housing court 
consent decrees from affiliating with banks, and;
  (6) penalize a financial institution and its affiliates through 
reduced CRA ratings if the institutions have engaged in predatory 
lending.
  CRA modernization is not only the right thing to do, it is the 
profitable thing to do. According to a Federal Reserve Board report 
issued on Monday, 91 percent of home lending and 82 percent of small 
business lending under CRA is profitable. This is comparable to any 
other type of lending.
  The bill is endorsed by the National Community Reinvestment 
Coalition, the U.S. Conference of Mayors, the National League of 
Cities, and the Association of Community Organizations for Reform NOW 
(ACORN). In my hometown of Milwaukee, it is supported by the mayor of 
Milwaukee, the Fair Lending Coalition, Interfaith Conference of Greater 
Milwaukee, Hope Offered through Shared Ecumenical Action (HOSEA), the 
Local Initiatives Support Corporation (LISC), the Neighborhood Housing 
Services of Greater Milwaukee, Milwaukee Innercity Congregations, 
Allied for Hope (MICAH), the Metropolitan Milwaukee Fair Housing 
Council, the National Association for the Advancement of Colored People 
(NAACP), Select Milwaukee and the Legacy Bank.
  CRA is paramount to continuing the progress this country has made 
towards eradicating discrimination in the financial services 
marketplace. And it is imperative that we modernize this important law 
now. The bottom line is that CRA is good for business. It not only 
levels the playing field to make sure that all creditworthy Americans 
have access to capital and credit, it makes good business sense.
  We hope you and all of our colleagues in the House will consider 
supporting the Community Reinvestment Modernization Act of 2000.

                          ____________________