In recent weeks, Republicans in Congress have been blaming a lot of things, besides themselves, for the sub prime mortgage debacle. And many of these same Republicans have long wanted to abolish the Community Reinvestment Act, a landmark law that helped to rebuild some of the nation’s most desolate communities by requiring banks to lend, invest and open branches in low-income areas that had historically been written off.
These two goals have converged in a new attempt to blame the law for the financial crisis.
The act, passed in 1977, is one of the most successful community revitalization programs in the country’s history. According to a recent report by the National Community Reinvestment Coalition, an advocacy group in Washington, the act has encouraged lenders to invest more than $4.5 trillion in minority and low-income areas.
This money helped to remake devastated neighborhoods like the South Bronx, helping to finance new housing and businesses. It has helped provide essential services in such neighborhoods, including medical centers and housing for the elderly and disabled — projects that the private sector too often refused to back.
But you can hardly pick up a newspaper or turn on the television these days without hearing critics argue that the act created the current mess we’re in by forcing banks to lend to people in poor areas who were bad credit risks. Representative Steve King of Iowa has introduced legislation that would repeal the act. Read more..
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