>Date: Tue, 3 Aug 1999 11:28:18 -0400
>
>NCRC Alert
>
>Financial Modernization Legislation About to Become Law: Act Now to Save
>the Community Reinvestment Act
>
>Dear Friends of Community Reinvestment:
>
>After several years of trying, Congress is poised to pass financial
>modernization legislation. This legislation will dramatically increase the
>market power of the largest financial companies by allowing banks,
>securities firms, and insurance companies to own each other outright. In
>order to prevent decreases in loans and increases in fees for America's
>working class and minority neighborhoods, community and consumer
>protections must be strengthened.
>
>The House of Representatives passed its version of financial modernization,
>H.R. 10 (the Financial Services Act of 1999) by an overwhelming vote of 343
>to 86 on July 1. The Senate passed S. 900 (the Financial Modernization Act
>of 1999) mostly along party lines on May 6. The only Democrat to vote for
>S. 900 was Senator Ernest Hollings (D-SC).
>
>The next step for the bill is a House-Senate Conference Committee which
>will reconcile the differences between H.R. 10 and S. 900. Fortunately,
>H.R. 10 has a wider support and more momentum heading into the Conference.
>H.R. 10 contains provisions that bolster the Community Reinvestment Act
>(CRA) while S. 900 would cripple CRA.
>
>ACTION NEEDED:
>
>The House-Senate Conference Committee formed just before the August recess
>(when members of Congress go back to their districts and Congress is out of
>session). The Committee is expected to start business in earnest right
>after Labor Day. Use the August recess to set up meetings with your member
>of Congress, especially those on the Conference Committee. Although your
>Representative may not be on the Conference Committee, it is important to
>contact him or her since Congress may have to vote again on a
>post-conference bill.
>
>A sample NCRC letter is reproduced below that contains the major talking
>points concerning H.R. 10 and S. 900. The list of House-Senate conferees
>is also reproduced below. The Capitol Hill switchboard number is (202)
>224-3121. Please contact the National Community Reinvestment Coalition
>(NCRC) on (202) 628-8866 if you have any questions, and carbon copy us on
>any letters you send.
>
>The Clinton administration has issued a veto threat if the anti-CRA
>provisions of S. 900 remain in the bill. NCRC believes the administration
>should also veto a final bill if any of pro-CRA provisions in H.R. 10 are
>deleted. Contact the administration by phone (202) 456-1414, by fax (202)
>456-2461, and/or by sending an e-mail to president@whitehouse.gov.
>
>
>NCRC LETTER
>
>Dear Conferee:
>
>As you begin to negotiate an agreement on a financial modernization bill,
>the National Community Reinvestment Coalition (NCRC) urges you to preserve
>the elements in H.R. 10 that strengthen the Community Reinvestment Act
>(CRA). A financial modernization bill will intensify the market power of
>the largest financial companies by allowing banks, insurance companies, and
>securities firms to own each other without any limitations. In order to
>prevent an increase in fees and a decrease in loans for broad segments of
>the American public, the 700 member organizations of NCRC believe that
>community and consumer protections must be enhanced. If the House-Senate
>conference deletes any of the pro-CRA provisions in H.R. 10 or adopts the
>anti-CRA provisions of S. 900, NCRC will recommend that the President veto
>the financial modernization bill.
>
>NCRC believes the following provisions in H.R. 10 are essential for the
>final bill:
>
>… CRA Applied to Wholesale Financial Institutions (WFI's): If WFI's are
>authorized by a financial modernization bill, CRA must be applied to them.
>As large investment banks, WFI's will have considerable assets that must be
>available for CRA-related community development lending for economic
>development and affordable housing projects. If CRA is not applied to
>WFI's, working class and minority communities could loose access to
>significant sums of investment capital that would be shifted from
>CRA-covered parts of the new holding companies to WFI's.
>
>… Public Hearing Requirement for Mergers Involving Banks above $1 Billion:
>During the House Banking Committee mark-up, Representatives Vento (D-MN)
>and LaFalce (D-NY) insisted upon requiring the federal banking agencies to
>conduct hearings in geographical areas in which the agencies believed that
>mergers involving banks with more than $1 billion in assets would have
>significant impacts. Public hearings are a critical time for CRA
>enforcement since they provide an opportunity for elected officials,
>religious leaders, community organizations, and ordinary citizens to
>provide input about how mergers involving major banks will affect their
>communities' access to loans, branches, and other banking services. In
>addition, as a bare minimum, the House-Senate Conference Committee must
>preserve an application requirement in H.R. 10 for mergers involving banks
>and non-depository institutions with assets of more than $40 billion.
>
>… Requirement to Maintain Satisfactory Ratings: H.R. 10 requires all bank
>subsidiaries of a holding company to have and maintain Satisfactory and
>Outstanding CRA ratings as a condition for being allowed to merge with an
>insurance company or a securities firm. This provision requires that banks
>and thrifts must abide by their community reinvestment obligations in order
>to enjoy the new powers and privileges accorded to them by a financial
>modernization bill. It is a fair provision for banks and communities.
>Since less than 2 percent of depository institutions fail CRA exams, it
>penalizes the relatively few lenders that completely fail to reinvest in
>the communities from which they take deposits. Furthermore, effective
>penalties, including the possibility of divestiture, for failing to
>maintain Satisfactory ratings, must remain in the final bill.
>
>NCRC insists that the following provisions in S. 900 be removed by a
>Senate-House conference:
>
>… Safe Harbor: S. 900 would make it virtually impossible for elected
>officials, community leaders, and citizens to participate in the merger
>application process by establishing an unrealistic standard of evidence.
>Under S. 900, federal regulatory agencies would be prohibited from
>considering a public comment if it did not prove that the banks in question
>no longer deserve Satisfactory or Outstanding ratings in most of the
>markets in which they operate. But public comments address future
>community reinvestment performance as well as past performance. Regulatory
>agencies must always consider comments on potential branch closings,
>reductions in lending, and other CRA issues that have dramatic impacts on
>the future availability of capital and credit.
>
>… Small Bank Exemption: S. 900 would exempt small banks under $100 million
>in rural areas from CRA. This amounts to more than 3,800 banks or 72
>percent of the rural banks in the country! In rural areas and towns, small
>banks often enjoy a near monopoly. Since competition is not a spur to
>serving customers, CRA is the primary incentive for banks in these
>communities to serve low- and moderate-income customers.
>
>… Create an Illusory Sunshine Provision: S. 900 would create a frivolous
>data-reporting requirement. Under S. 900 both banks and community
>organizations would be required to report on grants, loans, and investments
>made pursuant to CRA to federal banking regulators. This broad provision
>could involve data reporting on a wide range of contractual arrangements
>between banks and community groups, in addition to a large number of loans
>and investments made in connection to CRA. While this provision creates an
>enormous data-reporting requirement, it explicitly prohibits any oversight
>or enforcement by federal regulatory agencies of CRA-related lending
>commitments or promises made by banks.
>
>CRA has leveraged an enormous amount of reinvestment for working class and
>minority communities. Federal Reserve Governor Edward Gramlich recently
>estimated that CRA has been responsible for about $117 billion annually in
>home, small business, and community development lending and investing. A
>final financial modernization bill must therefore include the provisions in
>H.R. 10 that protect and advance CRA. NCRC also understands that there is
>a possibility that the House-Senate Conference Committee may consider an
>amendment offered by Rep. Barbara Lee (D-CA) that would prohibit insurance
>companies violating court consent decrees correcting fair housing
>violations from affiliating with banks. NCRC encourages the Conference
>Committee to adopt this amendment as an important protection against
>discrimination in lending.
>
>If financial modernization legislation becomes law this year, NCRC believes
>that Congress must quickly reconsider proposals to update CRA in a
>comprehensive manner as the financial industry is modernized. CRA must be
>applied to all affiliates of holding companies that lend and offer banking
>services if CRA is to keep pace with the rapid evolution in the financial
>industry that financial modernization will intensify.
>
>Please take strong steps over the next few weeks to protect and strengthen
>CRA. The American Dream of homeownership and small business ownership has
>been extended to millions of Americans because of CRA. CRA has been
>beneficial for them as well as all Americans by spreading the economic
>recovery to all communities. Attached is a list of NCRC's 700 community
>organization members that speak with one voice regarding the vital
>importance of CRA.
>
>Sincerely,
>John Taylor
>President and CEO
>
>
>Senate Conferees
>
>All of the Senate Conferees will consider all portions of the bills,
>including those that affect CRA.
>
>Democrats:
>
>Paul Sarbanes (D-MD)
>Christopher Dood (D-CT)
>John Kerry (D-MA)
>Richard Bryan (D-NV)
>Tim Johnson (D-SD)
>Jack Reed (D-RI)
>Charles Schumer (D-NY)
>Evan Bayh (D-IN)
>John Edwards (D-NC)
>
>Republicans:
>
>Phil Gramm (R-TX)
>Richard Shelby (R-AL)
>Connie Mack (R-FL)
>Robert Bennett (R-UT)
>Rod Grams (R-MN)
>Wayne Allard (R-CO)
>Mike Enzi (R-WY)
>Chuck Hagel (R-NE)
>Rick Santorum (R-PA)
>Jim Bunning (R-KY)
>Michael Crapo (R-ID)
>
>
>House Conferees
>
>House Conferees From Banking Committee
>
>Since the House is sending many conferees, the House leadership split up
>the duties of some of the conferees. The eight Republicans from the
>Banking Committee will be considering all portions of the bills, including
>those that affect CRA. The following Democrats will be considering the CRA
>portions of the bill: LaFalce, Vento, Frank, Kanjorski, Waters, and
>Maloney (NY).
>
>
>James Leach (R-IA)
>Bill McCollum (R-FL)
>Marge Roukema (R-NJ)
>Doug Bereuter (R-NE)
>Richard Baker (R-LA)
>Rick Lazio (R-NY)
>Spencer Bachus (R-AL)
>Michael Castle (R-DE)
>
>John LaFalce (D-NY)
>Bruce Vento (D-MN)
>Barney Frank (D-MA)
>Paul Kanjorski (D-PA)
>Maxine Waters (D-CA)
>Carolyn Maloney (D-NY)
>Luis Gutierrez (D-IL)
>Nydia Velazquez (D-NY)
>Mel Watt (D-NC)
>Gary Ackerman (D-NY)
>Ken Bentsen (D-TX)
>James Maloney (D-CT)
>Darlene Hooley (D-OR)
>
>House Conferees from Commerce Committee
>
>All eight Republicans from the Commerce Committee will be considering all
>portions of the bill, including those that affect CRA. The following
>Democrats will be considering the portions of the bill that affect CRA:
>Dingell, Towns, Markey, Waxman, DeGette, and Capps.
>
>Tom Bliley (R-VA)
>Michael Oxley (R-OH)
>Billy Tauzin (R-LA)
>Paul Gillmor (R-OH)
>James Greenwood (R-PA)
>Christopher Cox (R-CA)
>Steve Largent (R-OK)
>Brian Bilbray (R-CA)
>
>John Dingell (D-MI)
>Henry Waxman (D-CA)
>Edolphus Towns (D-NY)
>Edward Markey (D-MA)
>Diana DeGette (D-CO)
>Lois Capps (D-CA)
>Bobby Rush (D-IL)
>
>Judiciary Committee members Henry Hyde (R-IL), George Gekas (R-PA) and John
>Conyers (D-MI) will consider anti-trust provisions of financial
>modernization.
>
>Agricultural Committee members Larry Combest (R-TX), Tom Ewing (R-IL) and
>Charles Stenholm (D-TX) will consider privacy provisions dealing with the
>farm credit system.