Gonzalez Sets Out a CRA Compromise
WASHINGTON -- The banking industry's surprise legislative victory on Community Reinvestment Act requirements may be in jeopardy as Democrats on the House Banking Committee mount a counter-attack.
Committee Chairman Henry B. Gonzalez, D-Tex., has worked out an agreement with several freshman lawmakers that would replace CRA provisions adopted by a subcommittee last month.
Key Votes Sought
The Gonzales pact would leave existing CRA law intact while giving regulators 120 days to propose ways to reduce the industry's paperwork burden.
Rep. Esteban E. Torres, D-Calif., and 10 other Democrats warned in a "Dear Colleague" letter that they might not support the final banking reform bill if the CRA provisions adopted by the subcommittee remained. Among the signers were Rep. Barney Frank, D-Mass., and Rep. Charles Schumer, D-N.Y., whose support for the measure is considered crucial.
"We have a major, major fight ahead -- no question about it," said Kenneth Guenther, who heads the Independent Bankers Association of America. The trade group's members would be key beneficiaries of the provisions adopted by the subcommittee and sponsored by Rep. Paul Kanjorski, D-Pa.
One Kanjorski amendment would exempt banks with less than $100 million in assets -- and rural banks with assets of less than $250 million -- from the Community Reinvestment Act altogether.
A second amendment, more important to larger institutions, would create a "safe harbor" protecting banks from protests if they have received one of the two highest CRA ratings in the past two years.
Assistant Treasury Secretary Jerome H. Powell hinted that the administration might not oppose efforts to overturn the Kanjorski amendments if another measure linking CRA provisions to interstate branching were dropped.