The version being debated in the House will go a long way
toward protecting consumers, but it does not give the new agency the authority
to protect communities from discriminatory practices. To do so, the CFPA must
have the authority to implement and modernize the Community Reinvestment Act
and we call on Chairman Frank and members of the House Financial Services Committee
to reinstate this important provision. 
Historically, the success of the Community Reinvestment
Act has been largely due to the strong incentive financial institutions have to
comply in a satisfactory manner. As a result, the importance of a strong
community commitment has always been understood at the highest levels of bank
management. When the CRA was aggressively implemented during the 1990s, banks
successfully marketed safe and affordable loans to low-wealth people and helped
millions into sustainable homeownership. If the millions more who received
unaffordable or deceptive loans had instead received loans from CRA-covered
institutions, the current financial landscape would be very different.
With foreclosures continuing to rise, vacant properties
accumulating and property values declining, it is time to once again
aggressively implement the CRA. The best way to do so is to put the CRA under
the purview of the CFPA, recasting consumer protection as a community
development issue, and vice versa. As the CRA has demonstrated, safe and
sustainable loans build stronger communities. Likewise, when consumers choose
safe financial products, their communities are unquestionably better off. A
Consumer Financial Protection Agency that monitors the community responsibility
of financial institutions will ensure that the interests of consumers and
communities are protected.
Clearly, policymakers in Washington understand this. The
bill proposed by Chairman Frank goes a long way to balancing the need for
increased consumer protections and protecting financial institutions’ ability
to deliver innovative products, but the community development mandate of the
Community Reinvestment Act must be restored, to the CFPA, to protect
communities as well. This is a first, crucial step to keeping at least a
portion of the financial industry honest and ensuring that the economic
recovery is shared by consumers and communities alike.
Dory Rand, President
Woodstock Institute