The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“CREDIT OPPORTUNITY AMENDMENTS ACT OF 1995” mentioning the U.S. Dept. of Justice was published in the Extensions of Remarks section on pages E1116-E1117 on May 24, 1995.
The publication is reproduced in full below:
CREDIT OPPORTUNITY AMENDMENTS ACT OF 1995
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HON. BILL McCOLLUM
of florida
in the house of representatives
Wednesday, May 24, 1995
Mr. McCOLLUM. Mr. Speaker, today I am introducing legislation to fundamentally reform the Community Reinvestment Act of 1977 and to strengthen and clarify the enforcement of fair lending laws. CRA is one of the worst examples of runaway federal regulation on the books today. It is the number one regulatory burden for our depository institutions and compliance costs exceed one billion dollars a year.
When originally adopted, CRA was designed to stop redlining. Redlining is the practice of lenders refusing to make loans because of the racial composition of the neighborhood surrounding the property securing the loan. The enforcement of CRA quickly left its original purpose and turned toward credit allocation.
I strongly support efforts to eliminate redlining. The legislation I am introducing today includes redlining in the list of prohibited activities under the Equal Credit Opportunity Act and the Fair Housing Act. This makes it clear that we will not tolerate illegal discrimination in lending.
In adopting CRA in 1977, Congress did not anticipate there would be any additional burden on the banking industry. The Senate report accompanying CRA indicates that Congress believed that all the data needed to assure compliance was available and no new reporting or other paperwork would be required.
The enforcement of CRA by the federal banking regulators grew in complexity and burden throughout the years. In 1989, CRA was amended to add provisions requiring written evaluations and specific grades for institutions. This added further burdens for the industry and set us on the precipice of credit allocation.
Recently, the Clinton Administration completed a two year effort to rewrite CRA regulations. The new rules vastly expand the paperwork burdens for most banks. In addition, they complete the transition of CRA from prohibiting redlining to credit allocation. The new rules require regulators to measure bank performance on the basis of the total dollar amount and number of loans made to certain areas or groups. This is credit allocation, pure and simple. [[Page E1117]]
Another concern with CRA is the enforcement mechanism. Under current law, performance under CRA is taken into account when a bank regulator is considering an application from an institution for a merger or other transaction. Consumer groups have used protests to pending applications to force institutions to commit credit to certain borrowers or areas. In some cases the institutions have been forced to make grants to the protesting groups.
Recently, the Clinton Administration has linked the enforcement of CRA with other fair lending statutes. This has placed the Justice Department in the position as an additional bank regulator. It also has further confused the question of what is required to comply with CRA and the fair lending laws. In addition, the Justice Department has begun using disparate impact analysis to attempt to prove lending discrimination. Disparate impact analysis is imported from employment law and relies solely on statistical data to prove discrimination. Importing this analysis into lending discrimination is inappropriate. First, we should not find discrimination without some element of intent. In addition, the statistics available present an incomplete picture of the lending decision.
The bill I am introducing today addresses these problems. It amends CRA to eliminate the current enforcement provisions and the requirements for written evaluations. It replaces these sections with a new requirement that institutions disclose their activities undertaken to meet the needs of the communities they serve and to make these disclosures available to the public.
The legislation amends the Equal Credit Opportunity Act and the Fair Housing Act to prohibit redlining. In addition, it limits the Attorney General's authority under the Acts to bring cases only on referral from the primary regulator. Finally, it limits the use of statistical data to prove discrimination to those cases where there is evidence of intentional discrimination.
Mr. Speaker, this bill will eliminate credit allocation by the federal bank regulators. It is tough on lenders that redline neighborhoods. Yet, it is fair by removing costly and unnecessary burdens from financial institutions. These burdens currently result in limiting the amount of credit available to our citizens and businesses.
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