The economic boom has clearly played its part, as has the decline in mortgage interest rates. Between 1981 and 1990, median black family income rose 12.3 percent after controlling for inflation, compared to 9.2 percent for the median white family. Between 1990 and 1994, the average interest rate for a 30-year mortgage fell from 10.01 percent to 7.47 percent. Small, nonurban banks seek relief from what they regard as CRA's impositions. For instance, banks small and large must document efforts to extend their outreach into different areas of the community.
Small bankers view the resultant paperwork as unnecessary, unfruitful and burdensome.
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.