On September 16, 2009, Chairman of the House Financial Services Committee Barney Frank, D-Mass., held a full committee hearing to discuss the enhancement of the current Community Reinvestment Act (CRA) program and possible expansion of the CRA to credit unions and insurance companies. Specifically, the hearing examined legislation introduced by Rep. Eddie Bernice Johnson, D-Tex., that would accomplish this.
In his press release announcing the hearing, Chairman Frank expressed his willingness to expand the scope of the CRA to cover credit unions and insurance companies. Additionally, a small number of the witnesses submitted written testimony suggesting expansion of the CRA to insurance companies as a possibility.
In the end, with regard to insurance, the actual hearing can be summarized as "no news is good news." The members of the committee and the witnesses never mentioned expanding the CRA to insurance - and only in a few instances mentioned expansion of the CRA at all.
The focus of the hearing was on whether the CRA caused all or part of the economic crisis, and what steps should be taken to improve the current application of the CRA. Expansion of the CRA was briefly mentioned – members and witnesses spoke of the possibility of expanding the CRA to lending institutions, those that extend credit and provide capital, such as credit unions, independent mortgage companies and investment banks. Insurance companies were never mentioned.
Expansion of the CRA will continue to be an issue in the coming months. Many Members - notably Chairman Frank, Reps. Maxine Waters, D-Cal., Luis Gutierrez, D-Ill., and Mel Watt, D-NC – have made CRA reform and expansion a priority.
While the focus is on expansion of the CRA to lending/credit providers and "depository institutions" - insurance being down the list - it cannot be ignored because of Chairman Frank's press release mentioning insurance and the inclusion of insurance companies in Rep. Johnson's bill. In the months ahead, NAMIC will have a good opportunity to work with the committee to make sure insurance is removed from the scope of the legislation.
NAMIC opposes additional, unfair regulatory burdens for property/casualty insurance companies. Extending CRA requirements beyond banking institutions is unnecessary to achieve the goals of the CRA and would unfairly punish insurance providers who do not engage in lending activities. NAMIC will oppose legislation or any other efforts to expand the CRA’s reach into the property/casualty insurance industry.
Please direct any questions to Dylan Jones.
Posted: Tuesday, September 22, 2009 12:00:00 AM. Modified: Tuesday, September 22, 2009 10:51:39 AM.
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