Barrett, Gutierrez Sponsor CRA Modernization Bill
By Eugene T. Lowe
Representatives Tom Barrett (WI) and Luis Gutierrez (IL) have introduced a bill that will modernize the Community Reinvestment Act (CRA). The legislation, the CRA Modernization Bill of 2000, is crafted to ensure that community reinvestment keeps pace with the changes made in the Gramm-Leach-Bliley Act which allowed the affiliation of banks, securities firms, and other financial service providers. The Barrett-Gutierrez bill has 26 co-sponsors.
When the Gramm-Leach-Bliley Act was passed, there was great concern that many financial service providers were not covered by the CRA. Banks, of course, were still covered by the CRA, but institutions such as mortgage companies, insurance companies, and securities firms, who could now affiliate with and operate like banks, were not covered. The Barrett-Gutierrez bill corrects the shortcomings of Gramm-Leach-Bliley by making insurance companies, securities firms and other financial service providers subject to community reinvestment obligations. The performance of these financial institutions would be scrutinized by CRA-like exams.
Another strong provision of the Barrett-Gutierrez bill is enhanced data disclosure on the interest rate and terms of home loans. Insurance companies would also be required to publicly disclose HMDA (Home Mortgage Disclosure Act) like data. This enhanced data will make it possible to detect and penalize predatory lending and the financing of predatory lending.
John Taylor, President and CEO of the National Community Reinvestment Coalition, said of the bill: "Last year, Congress updated the financial industry and made it more powerful by allowing banks, securities firms, and insurance companies to merge and form large conglomerates. The CRA Modernization Act would ensure that these huge financial supermarkets will allow minority and working class people to come into their stores and shop for the most affordable home and small business loans, which are free of predatory and deceptive features."