About 4,000 financial institutions would be exempted under Gramm's proposal. Although most of them would go out of business if they did not serve their communities, they still have the expense of a CRA compliance officer and CRA paperwork. Larger bankers looking for new opportunities have found partnerships with nonprofit community organizations and neighborhood groups a fruitful source of business development. But Gramm calls the CRA in its current form a vehicle for fraud and extortion, with many organizations threatening protests against bank mergers unless they are paid off one way or another. When Household International tried to merge with Beneficial Corporation, it had to pay cash to an organization which had no operations where either bank is located to get it to withdraw a protest that threatened to delay the merger indefinitely.
Money is the great social leveler.
No federal money can go to a project that doesn't pay at this deliberately inflated scale. Many states have little Davis-Bacon laws, with similar provisions and effects. Both developers and banks naturally are wary of taking on a property where they may be liable for pollution discovered in the future but caused by owners decades before. Banks can't take environmental improvements as collateral. Thus the amount of equity financing required for a given project increases.