The Federal Reserve Board's proposed changes to Regulation Y will eradicate any recent gains in minority homeownership, says a housing advocacy group.
"At the very point that we're starting to see success (from Community Reinvestment Act requirements), they're pulling the rug," said Mike Shea, executive director of Acorn Housing Corp., a national nonprofit group based in Washington.
Acorn's indignation is focused on the "fast track" changes proposed to Regulation Y, which governs community comments on bank mergers and acquisitions. The Fed's proposed changes, Acorn says, will halve the public comment period to 15 days. Additionally, the proposal will eliminate banks' need to give details of their post-merger CRA plans, Acorn says.
"If anything, the public comment period should be lengthened," Mr. Shea said. Determining a bank's CRA performance is more time-consuming than it used to be, he said, because banks now have larger geographic territories and more diverse lines of business.
Half of all merger and acquisition applications filed last year would have been fast-tracked, Mr. Shea noted.
Fifteen days, he said, is barely enough time to examine a bank's Home Mortgage Disclosure Act numbers, let alone conduct any interviews with community members to ascertain the bank's commitment to fair-lending.
The Fed would not comment on Acorn's complaint.
Although overall mortgage lending declined last year, Acorn noted, mortgages made to minorities increased - in part because of partnerships formed with housing organizations.
In 1995, banks increased their lending to black borrowers by 10% and to Hispanic borrowers by 4.1%. This represents a dramatic change, Mr. Shea said, earned mainly because of the strength of the reinvestment act. "If you remove the threat of CRA," these numbers will decline, he said.
The official comment period for the proposed Fed changes closed Oct. 31, a window that Acorn officials said the Federal Reserve may have chosen to ensure passage of the proposal.
"You have to wonder if they timed it like this on purpose," Mr. Shea said. "Election Day, Congress is out, the administration is out campaigning - a lot of the countervailing interests are focused on other things."