Democratic leaders on the House Financial Services Committee are assembling legislation to expand Community Reinvestment Act requirements beyond banks, targeting nondepository mortgage firms, investment bankers, and insurers.
Lawmakers have pledged to push the initiative, which has been long awaited by consumer and community groups who have been lobbying for years to expand the CRA, as far as they can through Congress this year.
House Financial Services Committee Chairman Barney Frank and Rep. Luis Gutierrez, the chairman of the financial institutions subcommittee, are expected to introduce a CRA expansion bill as soon as this week that advocates hope will set the wheels in motion for meaningful and sweeping reform.
"The journey of a thousand miles begins with a single step," said John Taylor, the president and chief executive of the National Community Reinvestment Coalition, who is leading the effort. "It's a very significant thing because this is the unfinished business of financial reform. Financial reform was about creating more transparency and accountability and prohibiting bad practices. CRA modernization is about making sure the average person continues to have expanded access to the financial services sector. That's the single biggest complaint from middle-income and moderate-income people in America right now — that banks are not lending."
The bill is still being written and it is unclear what exactly it will entail. A spokeswoman for Frank shared no details and a spokesman for Gutierrez confirmed only that the Illinois Democrat is working on legislation.
But a few provisions appear clear, according to multiple sources. For one, the bill is not expected to target credit unions, even though Frank and others have said such institutions should eventually face CRA-like requirements.
