In Defense of the Community Reinvestment Act

Abstract

In the wake of the 2008 global financial crisis, the Community Reinvestment Act (CRA) of 1977 has probably received more media attention in the past 2 years than it garnered cumulatively over the previous 30 years. Numerous conservative pundits and commentators have blamed the CRA for the subprime crisis and the subsequent worldwide financial meltdown. Most social workers are probably unaware that the CRA is probably responsible for more investment, loans, and wealth creation in low and moderate income neighborhoods than any other single piece of federal legislation over the past 40 years. This article highlights the following features about the CRA that social workers need to know: The CRA was created and passed only because of grassroots community organizing; the CRA has been directly or indirectly related to 8 trillion dollars of investments, mortgage, and small business loans in low income neighborhoods since 1977; community organizing has always been the primary enforcement mechanism of the CRA; contrary to widespread right-wing media accounts, the CRA was not responsible for the housing bubble and worldwide financial crisis in 2008. In this article, we articulate the veridical factors contributing to the financial collapse. Presently, Congress is debating reforms for the financial sector, and the way banking functions will be transacted in the future remains unclear. Regardless of the eventual restructuring of finance, moving forward, social workers should continue to advocate for legislation that will ensure housing for low and moderate income people.

Keywords:

• affordable housing
• housing advocacy
• Community Reinvestment Act
• subprime lending crisis

Notes

Alternative Mortgage Parity Act of 1982, Pub. L. 97–320, 96 Stat. 1545.

Banking Act of 1933, Pub. L. 73-66, 48 Stat. 162.

Commodity and Futures Modernization Act of 2000, Pub. L. 106–554, 114 Stat. 2763.

Depository Institutions Act of 1982, Pub L. 97–320, 96 Stat. 1469. (1982).

Depository Institutions Deregulation and Monetary Control Act of 1980, Pub. L. 96–221, 94 Stat. 132.

Federal Deposit Insurance Corporation Improvement Act of 1991, Pub. L. 102–242, 105 Stat. 2236. (1991).

Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. 101–73, 103 Stat. 183. (1989).

Financial Modernization Act of 1999, Pub. L. 106–102, 113 Stat. 1338. (1999).

Home Ownership and Equity Protection Act of 1994, Pub. L. 103–325, 108 Stat. 2190 & 2196. (1994).

Riegel Community Development and Regulatory Improvement Act of 1994, Pub. L. 103–325, 108 Stat. 2160. (1994).

Riegel-Neale Interstate Banking and Branching Efficiency Act of 1994, Pub. L. 103–328, 108 Stat. 2338. (1994).

Tax Reform Act of 1986, Pub. L. 99–514, 100 Stat. 2085. (1986).