Has CRA Become Anti-Bank Activists' New All-Purpose Tool?
1998; American Bankers Association; Volume: 90; Issue: 8 Linguagem: Inglês
ISSN
0194-5947
Autores Tópico(s)Housing, Finance, and Neoliberalism
ResumoThe Community Reinvestment Act (CRA) is morphing. If cur rent trends hold, we will enter the new century dealing with issues that are quite different from those of the past. Several trends have converged to spark this shapeshift. Community advocacy groups' agendas have been steadily widening for the past few years, drawing in more issues that go beyond the credit needs of low- and moderate-income people. The wave of megamergers landed in this mix like a match in gasoline, catalyzing the situation in two ways. First, the big mergers generated a wide range of heightened public concerns about banking. Second, they attracted high-profile critics and much wider media coverage. The very existence of CRA sets up a regulatory and media amplifier that maximizes the voice of the industry's critics, whether the issues are about low-income lending or not. Recent megamerger announcements in other industries like telecommunications and automobiles are also controversial, but those industries do not have a built-in mechanism quite like CRA. Banking does. This process fostered an institutionalized set of critics with strong ties to the press, politicians, and other influencers. Now, these groups are using the old CRA megaphone in new ways, and the same megaphone is being picked up and used by entirely new players. Brewing troubles Hence, we see traditional community groups protesting new issues. The California Reinvestment Committee is seeking denial of the NationsBank/Bank of America combination, calling it a Godzilla banking merger and attacking its size, per se. Other groups are challenging Bane One/First Chicago's plans for divesting Indiana branches, arguing that the results will be anti-competitive. Philadelphia-based activists attack the First Union/Corestates merger based largely on prospective job losses. New York and other community groups have staged protests of the Citicorp/Travelers merger, singling out allegations of insurance redlining by Travelers. None of these issues is new in CRA, but they receive more and more central attention within the CRA framework. While all of them relate indirectly to CRA-type concerns, they represent a stretch from the traditional focus on credit for low- and moderate-income people. At the same time that CRA advocates are broadening their agendas, celebrity activists are joining the fray. Ralph Nader appeared on national television within days after the megamerger wave began, arguing that they will be good for banks and bad for consumers. Jesse Jackson has been vocal, reacting positively to the Citigroup CRA commitment and featuring a visit with NationsBank CEO Hugh McColl on his weekly program, Both Sides. I often watch Both Sides, and do not recall ever seeing a segment, regardless of topic and guest list, in which Rev. Jackson did not refer to the problem of widespread bank redlining as one of the main obstacles to progress for minorities and disadvantaged people. Meanwhile, the megamergers have touched off a barrage of commentary from both general political pundits and the business press. Their significance has been dissected on numerous Sunday network and cable talk show panels and, interestingly, my informal sampling found the analysis almost uniformly negative. Even conservative, free-market advocates have had little good to say about them. Many bankers undoubtedly share some of the negative feelings towards the huge mergers. However, this extreme level of political and media ferment does not bode well for an industry that hopes to minimize regulatory burdens. The common denominator in all this criticism is the charge that and financial industry convergence will be bad for everyone. Here are some emerging issues that may become flashpoints: Pricing. Almost in unison, a chorus of critics greeted the megamerger announcements with the complaint that big banks will charge more. Anecdote after anecdote has been related by people with access to the public airwaves, describing how their small bank was acquired by a big one and how prices went up immediately. …
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