Banking and Credit

Banking and Credit

Since the Great Depression, Congress has passed a series of laws to preserve stability in the banking and credit industries, protect consumers from unfair and deceptive practices and make affordable credit available to middle class and low-income families and small businesses.  Beginning in the 1980s, the deregulation of financial institutions has fed speculative booms and devastating busts. Privatization of low-cost government credit for student loans and mortgages and weaker consumer protections has driven up the cost of credit and put consumers at risk.

Commentary

Information is power… and that’s the problem

May 02, 2012

Why #OccupyWallStreet?

October 07, 2011

The Truth in Lending Act, 1968: Don't Confuse People With Information

May 18, 2011
Debt burden

Credit Card Sharks Crying Wolf

May 20, 2009

Cry Wolf Quotes

I think that every single company that offers a credit card is reassessing its cost….reassessing what they do and how they do it.

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Marcia Sullivan, director of government relations for Consumer Bankers Association, USA Today.

The problem with the Community Reinvestment Act is not its goals but its vagueness and ambiguity that have led to a nightmare of documentation, paperwork and formalized process that diverts bankers' time and bank resources from being utilized to serve our communities… we need to build a system of supervision and enforcement that encourages creativity and substance in community reinvestment lending.

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Michael K. Guttau, National Mortgage News

The Community Reinvestment Act should be repealed--not reformed or restricted but repealed! For no conceivable set of regulations on a bank is consistent with the objective of the Act to meet ‘the credit needs of its entire community, including low and moderate-income neighborhoods, consistent with safe and sound operation of such institution.’ The Community Reinvestment Act was the wrong solution to a genuine problem, for the most part created by other government regulations. Until recently, federal restrictions on interstate banking and state restrictions on intrastate branching severely restricted bank competition in local markets and the potential for geographic diversity of loan portfolios. These restrictions have been substantially reduced, promising a more competitive banking system that is more responsive to the interests of both depositors and borrowers and less vulnerable to adverse economic conditions in specific regions...Don't try to fix the Community Reinvestment Act. It can't be done. Repeal it.

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William A. Niskanen, Chairman, Cato Institute. Testimony, Subcommittee on Financial Institutions and Consumer Credit, House Committee on Banking and Financial Services

In 1989, sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation… bank regulators required the loosened underwriting standards, with approval by politicians and the chattering class. A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money.

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Stan Liebovitz, New York Post.

Evidence

Backgrounders & Briefs

A Timeline of the CARD Act

An interactive timeline of credit card reform.

Resources

The National Community Reinvestment Coalition works against unfair lending and banking practices, particularly those targeted towards low and middle income families.