```

[Congressional Record Volume 141, Number 87 (Wednesday, May 24, 1995)]
[Extensions of Remarks]
[Pages E1116-E1117]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                CREDIT OPPORTUNITY AMENDMENTS ACT OF 1995

                                 ______

                           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.

                          ____________________
```