Senate Republicans are putting tremendous pressure or banking regulators to ease up on enforcement of the Community Reinvestment Act.
An aide to Sen. Alfonse M. D'Amato, R-N.Y., chairman-presumptive of the banking panel in the 104th Congress, said Nov. 30 that the chairman plans early next year to hold hearings on CRA enforcement policies. This issue - particularly the proposed revision of CRA - " is the No. 1 priority" of the chairman, the aide said at a breakfast meeting of Women in Housing and Finance.
It also appears that Republicans on the banking panel will install a recentconvert, Sen. Richard C. Shelby, R-Ala., to head a new rgulatory efficiency subcommittee whose primary purpose will be to deterregulators from aggressive enforcement of the CRA.
The aide appeared to be putting pressure on the banking agencies - specifically Comptroller of the Currency Eugene A. Ludwig, who is taking the lead on CRA compliance - against including provisions in the regulation that would require banks to keep detailed records, including data collection on race and gender, for small business loans, and impose fines on banks for noncompliance under safety and soundness provisions of the 1989 and 1991 banking bills. Fines can be as high as $1 million a day.
A final regulation is expected to be published before year-end. The comments by the D'Amato aide appeared to imply that the incoming Republicans will lay the wood to Ludwig and others if the provisions are included in the regulation. And, if they are not, D'Amato and other Republicans will be able to take credit from the industry for their removal. The Republicans have been successful during the Clinton administration with these tactic - 53% of Americans believe that the administration's deficit reduction program increased the deficit over the past several years. But the reality is that many banking industry officials believe the OCC put the small business data collection provision in the proposal as a straw man that would inevitably be knocked out That ploy would allow commentators and industry lobbyists to point to those deletions as a victory while less controversial but equally substantive provisions are imposed. In any event, the Republicans were scheduled to meet Dec. 2 to organize the Senate for the new Congress. It was expected that the size of the banking panel would be reduced by four and the spread will be nine Republicans to seven Democrats. D'Amato is unlikely to head a subcommittee, but Shelby would retain his seniority even though he switched from a Democrat to a Republican and in the newly reorganized committee would head a subcommittee to be titled, "Regulatory Efficiency."