Restoring Accountability in the Financial System

                                                                                     Contact:  Jesse Van Tol (202) 464-2709
March 12, 2009                                                                                                                    jvantol@ncrc.org

Restoring Accountability in the Financial System

Rep. Eddie Bernice Johnson to Introduce the CRA Modernization Act of 2009 at NCRC conference “Roadmap to a Financially Inclusive Society”

Washington, DC – On Thursday, Representative Eddie Bernice Johnson will introduce the Community Reinvestment Modernization Act of 2009, announcing the bill on Capitol Hill before hundreds of community organizations gathered at the annual meeting of the National Community Reinvestment Coalition (NCRC). The legislation includes strong accountability measures for a broader set of financial institutions than previously covered, including enhanced public hearings, expanded data reporting requirements and the creation, for the first time, of a national foreclosure and loan modification data collection system.

“In recent months, we have seen the catastrophic effects that unsound loans can have on families and communities,” said Congresswoman Johnson.  “Today we take another step toward ensuring that financial institutions lend responsibly, while continuing to encourage them to invest in all the communities in which they operate.  The Community Reinvestment Act has a long record of benefiting low- and middle-income neighborhoods and the banks and thrifts that lend in those neighborhoods.  Expanding CRA to cover all financial institutions will make this good law even better.”

“Creating more accountability for financial institutions is critical to restoring integrity and trust in the financial system,” said John Taylor, president and CEO of NCRC. “Had the accountability measures in this bill applied to the lending institutions that issued the preponderance of subprime and other risky loans in recent years, it would have given us an earlier warning of the foreclosure crisis. CRA shines a powerful public spotlight on the lending practices of financial institutions. We applaud Representative Johnson for introducing this important piece of legislation.”

An essential part of the legislation applies CRA to a variety of non-bank institutions including independent mortgage companies, mainstream credit unions, mortgage company affiliates of banks, insurance companies, and securities firms.  The exams for non-banks would scrutinize the level of lending, investments, and other services offered in minority and low-to-moderate income communities.

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