The fate of the Community Reinvestment Act and fair lending laws is up in the air with the new GOP-controlled Congress. The new Republican-led banking committees must juggle the interests of minority borrowers with the business interests of lenders.
Mortgage lending executives, long accustomed to a perpetually changing financial industry, are anxiously awaiting the fallout from the political sea change in Washington. The Republican leadership in both the House and Senate are taking a new look at almost everything about the way Congress operates, from committee structures right down to the size of congressional offices.
Two areas actively being reexamined by the new Congress are the Community Reinvestment Act (CRA) and the Justice Department's enforcement of the Fair Housing Act (FHA) in recent suits against mortgage lenders. Though it's not yet clear how this Congress will approach CRA, it's conceivable that a Republican-controlled Congress might attempt to repeal CRA although that would be difficult given the position of the Clinton Administration on CRA. Even less clear, is how the Justice Department, still under the control of the Clinton White House, will approach the enforcement of fair lending.
Committee on Bankjng, Finance and Urban Affairs - 103rd Congress
Henry B. Gonzalez (TX), Chairman James A. Leach (IA) Stephen L. Neal (NC) Bill McCollum (FL) John J. LaFalce (NY) Marge Roukema (NJ) Bruce F. Vento (MN) Doug Bereuter (NE) Charles E. Schumer (NY) Thomas Ridge (PA) Barney Frank (MA) Toby Roth (WI) Paul E. Kanjorski (PA) Alfred A. McCandless (CA) Joseph P. Kennedy lI, (MA) Richard H. Baker (LA) Floyd H. Flake (NY) Jim Nussle (IA) Kweisi Mfume (MD) Craig Thomas (WY) Maxine Waters (CA) Sam Johnson (TX) Larry LaRocco (ID) Deborah Pryce (OH) Bill Orton (UT) John Linder (GA) Jim Bacchus (FL) Joe Knollenberg (MI) Herbert C. Klein (NJ) Rick Lazio (NY) Carolyn B. Maloney (NY) Rod Grams (MN) Peter Deutsch (FL) Spencer Bachus (AL) Luis V. Gutierrez (IL) Mike Huffington (CA) Bobby L. Rush (IL) Michael Castle (DE) Lucille RoybaI-Allard (CA) Peter King (NY) Thomas M. Barrett (WI) Elizabeth Furse (OR) Nydia M. Velazquez (NY) Bernard Sanders (I-VT) Albert R. Wynn (MD) Cleo Fields (LA) Melvin Watt (NC) Maurice Hinchey (NY) Calvin M. Dooley (CA) Ron Klink (PA) Eric Fingerhut (OH) Committee on Banking and Financial Service - 104th Congress
James A. Leach (IA), Chairman Henry B. Gonzalez (TX) Bill McCollum (FL) John J. LaFalce (NY) Marge Roukema (NJ) Bruce F. Vento (MN) Doug Bereuter (NE) Charles E. Schumer (NY) Toby Roth (WI) Barney Frank (MA) Richard H. Baker (LA) Paul E. Kanjorski (PA) Rick Lazio (NY) Joseph P. Kennedy II (MA) Spencer Bachus (AL) Floyd H. Flake (NY) Michael Castle (DE) Kweisi Mfume (MD) Peter King (NY) Maxine Waters (CA) Edward Royce (CA) Bill Orton (UT) Frank D. Lucus (OK) Carolyn B. Maloney (NY) Jerry Weller (IL) Luis V. Gutierrez (IL) J.D. Hayworth (AZ) Lucille Roybal-Allard (CA) Jack Metcalf (WV) Thomas M. Barrett (WI) Sonny Bono (CA) Nydia M. Velazquez (NY) Robert Ney (OH) Albert R. Wynn (MD) Robert L. Ehrlich (MD) Cleo Fields (LA) Bob Barr (GA) Melvin Watt (NC) Dick Chrysler (MI) Maurice Hinchey (NY) Frank Cremeans (OH) Gary Ackerman (NY) Jon Fox (PA) Ken Bentsen (TX) Frederick Heineman (NC) Steve Stockman (TX) Frank LoBiondo (NJ) Bernard Sanders (I-VT) J.C. Watts (OK) Sue W. Kelly (NY) New Chairman of the House Banking and Financial Services Committee, Jim Leach (R-Iowa) told consumer group representatives in May at committee hearings on regulatory relief for banks, "I would stress that this committee at this time is not looking at overturning CRA...it is looking at refining CRA. However, unless CRA is refined, it is going to be overturned."
Efforts to overturn CRA have not yet received serious attention, but legislative action is underway to lessen the extensive reach of the statute. The House banking committee approved regulatory relief legislation at the end of June, which if it becomes law will significantly weaken the CRA.
But the regulatory relief measure has a long legislative path to trace before congressional action is final. The next step for the banking regulatory relief bill (H.R. 1858) is the Rules Committee and thereafter the floor of the House for a vote. The Senate banking committee has not yet completed work on its banking regulatory relief legislation.
At this point, the House and Senate, after each passes versions of the legislation, would still have to work out the differences in their legislative proposals at a joint conference committee. Then they would go back to their respective bodies for a full floor vote on their compromise piece of legislation. Then if the legislative package is approved by both houses it would go to the president, who at that point can either sign the bill or veto it.
Senior Clinton administration officials have made recent public comments that the president may veto regulatory relief legislation that weakens CRA. Treasury Secretary Robert Rubin said, "I am strongly opposed to this evisceration of CRA," when asked to comment on the regulatory relief legislation approved by the House banking committee in June.
At this writing, the ultimate outcome of the regulatory relief legislation remains unclear. This article examines the changed political climate in Washington as reflected in the new composition of the banking committees and the likely impact of these changes on CRA and fair lending laws and their enforcement.
New committee lineups
Prior to last November's elections, the House Committee on Banking, Finance and Urban Affairs, under former Chairman Henry Gonzalez (D-Texas) had a powerful core group of northern Democrats with urban constituencies. Out of the 30 Democratic banking committee members, 12 seats were held by northern Democrats representing large urban areas such as New York, New Jersey, Pennsylvania, Massachusetts and Maryland.
Now, in the 104th Congress with the GOP in control, the House Committee on Banking and Financial Services is more evenly representative of rural and urban areas (see sidebar for committee listings).
The impact of the realignment of the banking committee membership is dramatically displayed in the change in the leadership position. Iowa's Leach replaced long-time Democratic Congressman Henry B. Gonzalez as chairman of the House banking committee. The impact of this change can already be felt as fellow Republican members have introduced several bills aimed at reducing regulatory burdens on financial institutions.
Leach's tenure as leader of the banking committee will differ significantly from that of his predecessor. Where Gonzalez was outspoken and partisan as chairman, Leach is considered reflective, independent and moderate in most Washington circles.
1994 Senate Banking Committee 1995 Senate Banking Committee