Community Bank Advocates Give Input on EGRPRA (Economic Growth and Regulatory Paperwork Reduction Act)

EGRPRA Hearing

Kevin Stein quips that the system, like his wrist, is broken.

You can watch the community panel here.  (discussion begins at 17:40 into the video)

Yesterday, community advocates attended a meeting in Los Angeles, hosted by the three main bank regulators, the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.  As part of the Economic Growth and Regulatory Paperwork Reduction Act of 1996, the meeting focused on identifying regulations that are outdated, unnecessary, or unduly burdensome while also balancing the regulator’s jobs to ensure the safety and soundness of the financial system.

After three panels with representatives from banks, a fourth panel consisted of community representatives.

Kevin Stein, associate director at the California Reinvestment Coalition, was one of the panelists.

A few takeaways from the meeting with community panelists include:

  1. The current rules need to be updated to reflect new bank practices.  Using CIT Bank as an example, some Internet banks are evading the requirements to reinvest in the communities where they accept deposits.  For example, while CIT Bank accepts $14 billion from around the US, it only reinvests those deposits near its Salt Lake City headquarters. See more here: Coalition Asks Bank Regulators: “Is There Community Benefit In OneWest And CIT Group Bank Merger?
  2. Dialogue is important between regulators, communities, and banks.  One good way to do this is through public community benefit and reinvestment plans.  To see an example of a recent one, look at Banc of California’s Community Benefit and Reinvestment plan.
  3. Bank regulators could provide negative credit to banks during their CRA exams for engaging in practices that are harmful to their communities- for example through financing payday lenders and other abusive lenders, or financing practices such as REO to Rental, which is hurting first-time homebuyers, displacing long-term tenants, and changing communities.  More about that here: 80 Organizations Ask Federal Gvt. to Address Investor Cash Flooding Into Neighborhoods   Another harmful practice can be seen in the example of OneWest bank foreclosing on widowed homeowners who have reverse mortgages serviced by Financial Freedom- a OneWest subsidiary. More examples of that here: HECM Non-Borrowing Spouses Renew Class Certification Attempts  and here: 103-Year-Old North Texas Woman Fights To Keep Her House  You can hear Sandy Jolley discuss Financial Freedom at the meeting here (move cursor to 1:10:18).
  4. Following their playbook BEFORE the our foreclosure crisis, banks are continuing to try and use preemption as a means to evade state consumer protection laws– for example, the California Homeowner Bill of Rights.  More on that here: Saving the Homeowner Bill of Rights 
  5. Some of the people most impacted by banks also may be the least likely to hear about bank mergers.  As an example, the California Reinvestment Coalition has begun hearing from consumers harmed by OneWest Bank and its subsidiary Financial Freedom because they have seen stories in the media about this proposed Too Big To Fail merger.  However, they are being told by the Federal Reserve that their comments “aren’t timely.”
  6. When banks leave communities, harmful financial service companies move in– like payday lenders, check cashers, and car title lenders. See CRC’s report about the high percentage of payday lenders in San Joaquin Valley as compared to banks: New Report Documents Lack of Banking and Financial Services in the San Joaquin Valley)

Interested in seeing more?  Read this press release: Community Advocates Urge Bank Regulators to Update Regulations (EGRPRA)


Regulation of Banks

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