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Treasury Dept Seeks to Gut Community Reinvestment Act Which Promotes Lending to Lower Income Borrowers
First, what is the Community Reinvestment Act that Trump's Treasury Department is seeking to destroy?
The Community Reinvestment Act (CRA), enacted by Congress in 1977.... is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate..... intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations.
The CRA requires that each insured depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities, including mergers and acquisitions.
To put it simply, Congress needed to step in back in 1977 to give banks a legal nudge to reduce their rampant discriminatory credit practices (ie refusal to lend money) against low-income neighborhoods, a practice you may have heard referred to as redlining.
The Trump administration plans to unveil a major revision to decades-old banking rules that mandate lending to low-income borrowers. Changes to the regulations of the Community Reinvestment Act.... could transform the way banks make billions of dollars in loans, investments and donations to customers in low- and moderate-income areas..... could make it easier for banks.... lower penalties for compliance problems.
After causing the largest global financial collapse in 70+ years, Republicans have remained very steadfast that banks be allowed to do as they please without government "interference."
Essentially Trump's appointees in the Treasury Department, including Steve Mnuchin who spent his career on Wall Street, are seeking to ikill the CRA by eliminating enforcement of it, allowing banks to effectively ignore it.... and ignore those with lower incomes.
....the Treasury Department is planning to unveil broader recommendations to revamp the government’s enforcement of the law. Since its inception, regulators and Congress have turned the CRA into an extensive public test evaluating how many loans, branches and investments a bank has to serve the poor. It is still unclear what many of the administration’s proposed changes will be, but some important potential changes, as well as some already enacted, make it easier for banks to pass the exam.
The results of this are incredibly ovious.
Community groups... fear that any rollback means low-income borrowers over time would have less access to loans and banking services. In recent years, for example, some lenders have focused on serving more affluent customers although the CRA generally has prevented banks from focusing exclusively on the wealthy.
More of the usual Republican efforts to eliminate rules that protect us and improve our society in order to serve their donors instead of us.
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