|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Thursday, May 6, 1999||202-224-0894|
Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, congratulated the Senate for approving a measure that requires public disclosure of any agreements that banks make in connection with the Community Reinvestment Act. The measure was contained in an amendment to S. 900, the Financial Services Modernization Act, which passed the Senate on May 6.
The Banking Committee staff has been examining the agreements signed by banks to fend off CRA-related complaints. Such agreements often contain pledges of grants or other cash payments to community groups, and some detail the terms of loans that will be made by the groups with money provided by the banks.
"Part of our problem is that community groups, in negotiating with banks, in virtually every case, insist on the confidentiality of these agreements," Gramm said. "So one of the problems in evaluating these payments is that we do not have any of the facts as to where this money goes, who it goes to and what they do with it when they get it."
One of the agreements obtained by the Banking Committee staff details the financial arrangement for a community group that uses money provided by a bank to make loans. The group receives 2.75 percent of the face value of each loan, according to the secret agreement.
"This is the kind of agreement that should be known among people in the community so they can decide whether this group is truly representing the community or just the founder's interests," Gramm said. "With the new Senate measure, we will bring some sunshine and accountability to CRA."
The Senate legislation requires disclosure of all CRA-related agreements signed after May 5, 1999, that are worth $10,000 or more per year. The agreements must be filed with federal bank and thrift regulators and made available to the public. The legislation also requires annual reports on each agreement, including data on loans, investments and services provided by the bank and the community group as a result of the agreement.