Congress Guts CRA
The bill that emerged from conference committee negotiations over the financial modernization bills, H.R. 10 and S. 900, would gut the Community Reinvestment Act (CRA). The new bill, largely authored by Senator Phil Gramm (R-TX), would reduce the frequency of CRA exams from every two to every five years for both urban and rural banks with assets under $250 million. According to the National Community Reinvestment Coalition (NCRC), this would effectively exempt more than 80 percent of all banks and thrifts from regular and serious reviews by CRA examiners and community groups. NCRC says it is appalled at the back room negotiating that “considered the interests of the financial industry first and communities last,” and it is calling on the president to veto the bill.
The new bill also eliminates penalties for financial holding companies if they fail to maintain passing CRA ratings. The holding companies would only have to show a satisfactory rating initially. The bill would prohibit the Federal Reserve Board and other banking agencies from monotoring the level of loans and investments made under CRA agreements during CRA exams and merger applications.
Democrats’ attempts in conference committee to strengthen the bill’s CRA provisions failed along party lines, though House Banking Committee Chair James Leach (R-IA) voted with Democrats on an amendment offered by Representative LaFalce (D-NY) to extend CRA to the new wholesale financial institutions the bill authorizes.
From the National Community Reinvestment Coalition, 202-628-8866, www.ncrc.org; and the National Low Income Housing Coalition, 202-662-1530, www.nlihc.org.
HUD Appropriations
The House and Senate agreed on HUD appropriations in mid-October, and President Clinton is expected to sign the bill, although the administration had threatened to veto earlier versions. Negotiations between Jack Lew, Director of the White House Office of Management and Budget, and the lead House and Senate appropriators, both Democrats and Republicans, resulted in a conference agreement that increased funding in several areas – beyond the levels in the House and Senate VA/HUD bills. The budget provides 60,000 new rental assistance vouchers and increases homeless assistance and the public housing operating fund. It also level-funds Community Development Financial Institutions (CDFI) at $95 million and keeps the Community Builders program until September 1, 2000. A detailed HUD budget chart is available on the National Low Income Housing Coalition website, www.nlihc.org/news/chart1015.htm.
The conference report boosts the public housing operating fund $320 million above last year’s level but cuts the public housing capital fund by $100 million, although the total capital fund amount of $2.9 billion is still an improvement compared to years prior to FY99 and exceeds the president’s funding request. Congress delayed implementation of the new public housing assessment system until HUD seeks more input, receives a forthcoming report from the General Accounting Office, and publishes a consensus-based final rule in the Federal Register. The conference report also directs HUD to contract with the Urban Institute to study the long-term effects of the HOPE VI program on former residents of distressed public housing.
The report requires HUD to mark project rents up to market rates for many privately owned HUD-subsidized developments, provides for enhanced vouchers for residents at risk of displacement, and makes changes to disabled and elderly housing programs.
The final HUD appropriation increases funding for homeless assistance grants from $975 million to $1.02 billion. The bill stipulates that at least 30 percent of these funds be used for permanent housing and that each grantee match 25 percent of the funding they receive for homeless assistance services. Further, the report directs HUD to ensure that state and local jurisdictions pass on at least 50 percent of all administrative funds to the nonprofit organizations administering the homeless assistance programs.
The bill takes a number of steps to reach the funding levels it does. It appropriates $4.2 billion and rescinds $1.3 billion in recaptured Section 8 housing assistance funds from the Annual Contributions for Assisted Housing account and the Housing Certificate Fund account that “are not expected to be needed in fiscal year 2000.” It also rescinds $943 million in unobligated balances of funds previously appropriated in the Housing Certificate Fund or Annual Contributions for Assisted Housing accounts.
Funding for the president’s America’s Private Investment Companies (APIC) Program, which expands investment capital for distressed urban and rural areas, is contingent upon enactment of authorizing legislation by June 30, 2000. If the APIC program is not authorized by then, the $20 million appropriated for it will transfer to the CDFI program. The conference committee report also includes $55 million for urban Empowerment Zones, to be used in conjunction with economic development activities detailed in strategic plans of each empowerment zone, and $15 million to the Secretary of the Department of Agriculture for grants to designated rural Empowerment Zones. The report also provides for $5 million for the Moving to Work demonstration program to cover the cost of rent-based work-incentives to families in selected public housing developments. The report provides no funding for the regional opportunities counseling program.
From the National Low Income Housing Coalition, 202-662-1530, www.nlihc.org; and the Center for Community Change, 202-339-9350, www.communitychange.org.
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