Honey, I Shrunk the Bank
The four federal bank regulatory agencies have proposed changing the definition of a “small bank” from one with assets of up to $250 million, to one with assets up to $500 million. The Office of Thrift Supervision (OTS) even proposed increasing the threshold to $1 billion. “Small” banks receive a streamlined CRA lending test – one that does not review community development lending or an investment and service test, thereby limiting their obligations to communities.
Recently, the Federal Reserve Board and the Office of the Comptroller of the Currency withdrew their proposed weakening of CRA exams, but the OTS forged ahead and raised the threshold on the banks it oversees.
OTS’s decision means that 88 percent of the thrifts (or 828 institutions) in the United States now have severely limited examinations of their lending activities. These thrifts have more than $161 billion in assets and own 2,972 branches, reports the National Community Reinvestment Coalition (NCRC), who, along with scores of community groups, provided testimony to regulators opposing increasing the benchmark for small institutions.
“OTS acted independently of other bank regulators in issuing this final rule and preempts existing Congressional efforts to define small banks and goes way beyond the initial proposal of the four regulatory agencies,” said John Taylor, president of the NCRC. “Removing real CRA obligations for thrifts in the country is the equivalent of unleashing a hurricane of destruction on low- and moderate-income communities across America. The result is billions of dollars of lost investments, thousands of fewer loans and a new era of redlining,” said Taylor.
Regulators at the Federal Deposit Insurance Corporation will be considering these new rules in September. “If the FDIC goes the way of the OTS and applies the easy exam to banks under $1 billion in assets, 96 percent, or 5,115, of the banks they regulate will have the easy, ‘wink and nod’ CRA exam,” writes NCRC. Advocates are urged to write to the FDIC and their Congressional representatives opposing this attack on CRA. (See www.ncrc.org and www.fdic.gov for more information.)
From Hummers to houses, Americans love big. If their homes aren’t big enough, they move up, or tear down and rebuild. Chicago suburb Arlington Heights is considering imposing a “$7,500 tax when 50 percent or more of a house is torn down for redevelopment. The money would go into a community trust fund earmarked for… affordable housing…” Arlington Heights has had more than 100 teardowns in 2003 and close to 50 so far this year. Critics contend that “teardowns” change the character of neighborhoods, eliminate small affordable homes and increase taxes on adjacent homes. Others support teardowns as simply a property owner’s right. Highland Park, IL, has a similar tax and has generated over $800,00 in a few years. (Chicago Daily Herald, 07/10/04)
Welcome to the Sinking Boat
While more poor people are seeing their safety nets tattered, their ranks are increasingly being joined by the beleaguered middle class. With the decline in decent paying jobs and increase in costs for housing and healthcare, more of the middle class is also struggling.
And how has Congress come to their aid? Not so well, according to the Drum Major Institute in its recent report Middle Class 2003: How Congress Voted. While Congress overall did a poor job supporting working people’s access to housing and healthcare, their right to organize or receive overtime pay, the difference is stark when compared by party. Overwhelmingly, Democrats supported aid to those earning between $25,000 and $100,000 per year, while Republicans failed on key votes supporting the middle class. (www.themiddleclass.org)
Still, most people in the middle class don’t see their interests as similar to the interests of the poor. But not since the great depression have those interests overlapped more. “This contradiction – between the ‘middle class state of mind’ and the financial realities of a middle class life – illustrates a failure of the American dream,” writes Andrea Batista Schlesinger, executive director of the Drum Major Institute. “And if the dream fails the middle class, it fails those who aspire to work their way up.”
Perhaps it’s time for a new movement?