A Qualitative Analysis of Local Attitudes Toward the National CRA Debate
Hoy, Brett Y.
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The Community Reinvestment Act of 1977 (CRA) was enacted to encourage banking institutions to help meet the credit needs of their entire communities, including low-and moderate-income neighborhoods, consistent with safe and sound operation of the institution" (Board of Governors of the Federal Reserve Board 2000, i). The Act although seemingly reasonable, has been debated nationally by community organizations and financial institutions since its inception. The comparison of the national CRA debate to the local attitudes held by community organizations and financial institutions toward the CRA is the focus of this paper. This paper first attempts to identify the over-arching attitudes and themes, which historically defined, and continue to define, the debate over the CRA on a national level. Through my research, two conflicting perspectives became apparent between liberal-minded advocates of the CRA and the conservative opponents of the CRA who desire to weaken or repeal the act. CRA advocates tend to be community organizations that attempt to use and reform the CRA in order to place more pressure on the financial institutions (banks) to comply with the Act. This view clashes with the laissez-faire methods advocated by CRA conservatives and their belief that the Act is a form of extortion. Claiming to see a shift away from the importance of such ideology, most notably on the part of financial institutions, a third perspective evolved in more recent years. This perspective which I term "evolutionist," documents benefits received by inner cities under "The Credit Revolution." The Revolution represents an influx of credit availability, which was previously non-existent in urban areas. "Evolutionists" attribute The Credit Revolution to efforts made on behalf of the CRA, by the federal government, grass-roots community organizations and financial institutions.