American Banker, September 25: Warren wades into CRA overhaul with revamp plan of her own
WASHINGTON — Sen. Elizabeth Warren, D-Mass., on Tuesday threw a new twist into efforts to reform the Community Reinvestment Act. Warren released a bill that would apply CRA requirements to a broader array of institutions and make penalties for tougher for any violations.
Whereas now the law only applies to FDIC-insured banks, both credit unions and nonbank mortgage originators would have to follow CRA requirements under the proposal. Warren’s bill also proposes billions of dollars of new investments into affordable housing trust funds.
The summary of the bill said reductions in investments for lower-income and middle-class housing projects “creates shortages that drive up costs for everyone, produces crumbling and unsafe housing stock in many urban and rural communities, and slows economic growth.”
The bill, called the American Housing and Economic Mobility Act, would also prohibit discrimination on the basis of sexual orientation, gender identity, marital status and source of income, among other things.
Consumer groups have long argued the CRA grades are unclear and lack teeth. Warren’s proposal focuses more on protecting consumers against discrimination, which could create an added layer of enforcement.
“This bill presents a vision for updating the Community Reinvestment Act that places the well-being of communities at the center of it,” said Jesse Van Tol, CEO of the National Community Reinvestment Coalition. “Senator Warren has outlined a broad commitment to safer and more accessible economic opportunity in neighborhoods, communities, cities and rural areas across the country. This legislation should have the support of every fair-minded member of the Senate.”
