{"id":41308,"date":"2021-11-18T09:31:32","date_gmt":"2021-11-18T14:31:32","guid":{"rendered":"https:\/\/nationalcenter.org\/?p=41308"},"modified":"2021-11-18T09:31:32","modified_gmt":"2021-11-18T14:31:32","slug":"reforming-community-reinvestment-with-responsibility","status":"publish","type":"post","link":"https:\/\/nationalcenter.org\/ncppr\/2021\/11\/18\/reforming-community-reinvestment-with-responsibility\/","title":{"rendered":"Reforming Community Reinvestment With Responsibility"},"content":{"rendered":"

As a candidate, Joe Biden campaigned<\/a><\/strong> on expanding the Community Reinvestment Act<\/a><\/strong> (CRA). This program, created in the late 1970s, was intended to help low-income neighborhoods get increased access to banking services they were sometimes denied due to discrimination. But tying financial goals to equitable desires has led to serious problems like the mortgage crisis<\/a><\/strong> late in the presidency of George W. Bush.<\/p>\n

\"Richard<\/p>\n

With the Biden Administration fixated on equity, history now has the sad prospect of repeating itself. Project 21<\/a> <\/strong>member Rich Holt<\/a><\/strong> notes in a commentary syndicated by InsideSources:<\/p>\n

While the great optimism that liberals had in trying to reconcile the sins of the past may have seemed admirable at the time, there is a formidable downside. Like all liberal ideas that come from deep in the heart \u2014 or from the jackboots of the foot \u2014 the CRA attempts to correct inequity by attacking the symptom and not the problem.<\/p>\n

The symptom? Black Americans have been discriminated against by banks, and have had difficulty getting loans. The real problem has been a lack of blacks with the business and financial education needed to open, run and maintain businesses and cover mortgages. Instead of using the Chamber of Commerce and the existing businesses \u2014 as well as other community resources \u2014 to help train a generation of black entrepreneurs and homeowners, big government instead forced existing lending institutions to make sure a certain percentage of loans checked a quota box.<\/p><\/blockquote>\n

This hasn’t served anyone very well. \u201c[S]imply creating a government mandate,\u201d Rich writes, \u201cdidn\u2019t yield the intended results of building on the gains of the civil rights movement and creating a new class of homeowners and entrepreneurs.\u201d<\/p>\n

Pointing out that the CRA fundamentally mismanages the financial marketplace, Rich remarks that \u201cforcing quotas on banks doesn\u2019t encourage them to offer loans to those they shouldn\u2019t have discriminated against in the first place.\u201d He adds:<\/p>\n

Racial quotas attack the symptom, not the problem \u2014 which is why it\u2019s necessary to create a culture of entrepreneurship in the black community.<\/p><\/blockquote>\n

To reform the CRA, Rich suggests investors need to understand their responsibilities and the consequences of their action (or inaction). This includes financial literacy training<\/a><\/strong> for novice investors. The goal, of course, is making sure these investors succeed by not losing their homes or businesses because they don\u2019t understand the seriousness of the system. This is the lesson of the housing bubble.<\/p>\n

But Rich is not optimistic.<\/p>\n

\u201cThe Biden Administration has the power to embrace real solutions to the problem,\u201d Rich notes. \u201cBut it\u2019s likely it will do what liberals do best: \u2018Do what I say, or I\u2019ll kill your business.\u2019\u201d<\/p>\n

Rich\u2019s commentary has appeared in papers including the North Andover Eagle-Tribune<\/a><\/strong>, Marietta Daily Journal<\/a><\/strong>, Finger Lakes Times<\/a><\/strong> and Rome News Tribune<\/a><\/strong>. InsideSources<\/a><\/strong> syndicates to almost 300 newspapers nationwide with a readership of over 25 million people.<\/p>\n

\"\"<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

As a candidate, Joe Biden campaigned on expanding the Community Reinvestment Act (CRA). This program, created in the late 1970s, was intended to help low-income neighborhoods get increased access to banking services they were sometimes denied due to discrimination. 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