The 30th Congressional District of Texas, like many communities, is diverse and its residents should not be denied bank loans because of where they live. The Community Reinvestment Act (CRA) came into existence to protect people from housing discrimination. President Jimmy Carter signed the CRA in 1977 to establish a system to monitor and rate whether banks and thrifts meet a variety of needs that include: financing for rental housing, home mortgages, small business startup and expansion costs. The CRA encourages prime lending by offering banks incentives for its foreclosure prevention efforts, counseling loan recipients, modifying loans and investing in finance loan modification. The CRA also penalizes banks through reduced CRA ratings that result when a bank is caught practicing discriminatory loan practices – not lending to all of their qualified customers. Presently, the CRA only applies to banks and thrifts (thrifts are depository institutions like savings banks and savings and loan associations), however the CRA does not apply to other financial institutions that lend money like bank affiliates, independent mortgage companies and credit unions.
To solve this issue, I introduced the H.R. 1479, the Community Reinvestment Modernization Act. My legislation strengthens the existing CRA by expanding it to all institutions. I believe the CRA Modernization Act will help restore integrity to and trust of our financial system. The legislation will also strengthen the accountability of banks, address racial disparities in lending, penalize banks that engage in predatory and abusive lending practices and require federal regulatory agencies to hold more public hearings and meetings when banks merge.
~ Congresswoman Eddie Bernice Johnson (D-TX), Summer 2010
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