More on the Community Reinvestment Act

The following excerpt is from the National Low Income Housing Coalition's. October 10th Memo to Members:

***Financial Crisis Used to Undermine CRA***

In an effort to deflect blame from the regulatory and market failures that led to the current financial crisis, conservative policy makers and pundits have launched an attack on the Community Reinvestment Act (CRA). CRA, which was enacted in 1977,
provides that regulated financial institutions are obligated to help meet the
credit needs of their local communities, including lower income neighborhoods.

According to Media Matters, which is tracking the issue, anti-CRA
statements have been made on The O'Reilly Factor and The Radio Factor with Bill
O'Reilly, and in an editorial in Investor's Business Daily and a column in The
Boston Globe. In addition, online blogs have picked up on the issue.
Conservative members of Congress have also begun to attack the CRA, with
Representative Steve King (R-IA) this week introducing a bill that would
eliminate the CRA (see article elsewhere in Memo).

These elected officials and media figures argue that the law caused the
current financial crisis because it forced lenders to make bad loans to minority and lower income families.

These arguments are false. In truth:

· CRA existed long before the current crisis.

· The Act requires that activity under the CRA be consistent with the safe and sound operations of the bank, in order to protect against imprudent lending.

· Approximately 75% of subprime loans were made by institutions not covered by CRA requirements.

In an effort to combat these unfounded allegations, advocates will be working to
increase awareness of CRA and the positive effects it provides for lower income
communities. National groups, led by the National Community Reinvestment
Coalition, are circulating a statement in support of the CRA that will be
available shortly.

Under the CRA, banks are rated for their lending and investment activities— including home loans, banking services, small business loans, and community development lending—in low and moderate income neighborhoods. Ratings are done by one of four banking regulatory agencies: the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Federal Reserve Board and the Office of Thrift Supervision. If one of these regulatory agencies finds that an institution is not meeting the needs of its community, the agency can delay or deny the institution’s request to merge with another institution or expand its services.

Advocates can
comment at anytime on a financial institution’s CRA performance. In the best
cases, the Act has encouraged institutions to work closely with community groups
to identify and supply needed products and services. In recent years, CRA
opponents have worked to reduce the number of banks governed by CRA
requirements.

Information about the CRA exam process can be found at www.ffiec.gov/cra/default.htm

Information on the false CRA attacks is available at http://mediamatters.org/items/200809300012

NCRC has published “CRA: Myth and Fact” at www.ncrc.org/index.php?option=com_content&task=view&id=353&Itemid=80

The Next Critical Legal Reading Group Article

is Legal Education as Training for Hierarchy by Duncan Kennedy. You can view and print it here. The next discussion group will be held on October 21 over the lunch hour in room 35. All are welcome!

Bailout Event Follow Up

Thanks to everyone who came to the Bailout event on September 30th- room 25 was packed! Big thanks to ACS for co-sponsoring.

If you are interested in learning more about the underlying causes of the current economic crisis and how to best address it, Professor Cox has passed along some recommended readings:

Center for Responsible Lending Website

Did Liberal's Cause the Subprime Crisis?, Robert Gordon

Blame it on the Immigrants, David M. Abromowitz

National Community Reinvestment Coalition Website

Build a Better Bailout:
The Paulson plan should target bad loans, not burned investors,
Howell E. Jackson

Critical Legal Studies Reading Group

PILSA met for the first session of the brand-new Critical Legal Studies Reading Group for lunch yesterday in room 35. We talked about this months article, Making Docile Lawyers: an Essay on the Pacification of Law Students, 111 Harv. L. Rev. 2027, got some things off of our chests, and thought of a few ways in which law school could be different.

Because this topic is close to the hearts of many law students, we are going to read an article along similar lines for next month. Stay tuned for the citation!