WASHINGTON - A Chicago-based community group has joined a growing chorus of groups demanding that Congress leave the Community Reinvestment Act alone.
The Woodstock Institute, a 22-year-old housing group, released a report this week showing that the reinvestment law spurred a 350% increase in multifamily lending in the Windy City.
"We shouldn't mess with success," said Malcolm Bush, president of the institute. He said added that there is no need for lawmakers to intervene.
The Woodstock Institute study closely follows a report by the Association of Community Organizations for Reform Now, which showed that most banks with high minority loan rejection rates receive satisfactory CRA grades. Also, a coalition of bankers and activists issued a statement last week urging lawmakers to give regulatory changes a chance to work.
Both the House and the Senate are considering bills that would exempt small banks from CRA and provide "safe harbors" to shield banks with good CRA marks from community protests.
The institute's study is one of the few to focus on multifamily housing. The group found that banks went from making 278 of those loans in 1984 to originating 1,105 in 1993. The value of those loans increased more than 400% to $240 million, the institute found.
The numbers include both new construction and rehabilitation loans.
The institute also looked at the number of building permits issued, finding that builders spent an average of $24 million a year between 1983 and 1985 compared with $50 million between 1991 and 1993.
The housing group explored CRA's effect in the 45 poorest neighborhoods, comparing the average number of CRA loans in the mid-1980s compared with the early 1990s. It discovered that multifamily housing loans increased 200% in 25 neighborhoods, 500% in eight, and 1,000% in three.
The organization said community reinvestment feeds on itself, arguing that landlords are more likely to rehabilitate their properties if other owners are.
"An ineffective CRA will destroy years of slow rebuilding that have resulted in the successes exemplified by the multifamily housing story in Chicago," the group wrote in its study.
