Dems Want to Expand Community Reinvestment Act (CRA)

Even though the Community Reinvestment Act (CRA) is believed to be responsible in part for the mortgage meltdown, Democrats want to expand the program and give it even more money and power.

The original bill, created in 1977, has funded groups like ACORN. They claim that over $1 trillion in CRA loans have been made. So-called "community groups" like ACORN benefit themselves from the CRA through a process that sounds like legalized extortion. The CRA is enforced by four federal government bureaucracies: the Fed, the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation. The law is set up so that any bank merger, branch expansion, or new branch creation can be postponed or prohibited by any of these four bureaucracies if a CRA "protest" is issued by a "community group." This can cost banks great sums of money, and the "community groups" understand this perfectly well. It is their leverage. They use this leverage to get the banks to give them millions of dollars as well as promising to make a certain amount of bad loans in their communities. (1)

Banks are screwed. If they go along with the law, they risk more defaults by loaning to people that shouldn't be getting loans. If they don't, they face financial penalties and more.

Madeline Talbott, an activist with extensive ties to Barack Obama, made an effort to, as she put it, drag banks "kicking and screaming" into high-risk loans. A September 1993 story in The Chicago Sun-Times presents her as the leader of an initiative in which five area financial institutions (including two of her former targets, now plainly cowed - Bell Federal Savings and Avondale Federal Savings) were "participating in a $55 million national pilot program with affordable-housing group ACORN to make mortgages for low- and moderate-income people with troubled credit histories." (2)

"There is clearly arguable evidence that the CRA is at the root of this financial meltdown," says one GOP committee member. "So what do they do? They try to expand CRA." (3)

H.R. 1479 (found here in PDF) was authored by Senator Eddie Bernice Johnson (D-TX). Johnson's bill has 51 co-sponsors, including some of the most liberal members of the House, like Reps. Dennis Kucinich, John Conyers, Bobby Rush, Steve Cohen, and Barbara Lee (4).

"Congress has passed a number of laws designed to combat redlining and eliminate housing discrimination," Johnson said at the hearing. "Unfortunately, we all know that redlining still occurs."

So that brings up a good question. If this stuff is already illegal, why not use the law that ALREADY EXISTS?


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1. DiLorenzo, Thomas J. (2007, September 6). "The Government-Created Subprime Mortgage Meltdown". Lew Rockwell.
Retrieved September 17, 2009, from LewRockwell.com

2. Kurtz, Stanley (2008, September 29). "O's Dangerous Pals". The New York Post.
Retrieved September 17, 2009, from nyPost.com

3. York, Byron (2009, September 16). "Dems push expanded Community Reinvestment Act; deny Act's role in mortgage meltdown; GOP cites ACORN connection". The Examiner.
Retrieved September 17, 2009, from WashingtonExaminer.com

4. York, Byron (2009, September 16). "Dems push expanded Community Reinvestment Act; deny Act's role in mortgage meltdown; GOP cites ACORN connection". The Examiner.
Retrieved September 17, 2009, from WashingtonExaminer.com