Problem:
Unregulated Banks and Financial Markets
For too long, Wall Street and Big Banks have been allowed to play by their own rules. And the American people have yet to see any significant financial reform that could reign in big bank greed.
Unfortunately, it’s not surprising. Big banks continue to spend millions to lobby Congress to block any bills that would stifle their massive profits and make our economy more secure.
Two laws passed in the 70s, however, created an affirmative obligation for banks to invest in all communities (regardless of race) and disclose information on their lending practices: the Community Reinvestment Act (CRA) and the Home Mortgage Disclosure Act (HMDA).
CRA and HMDA worked together to protect Americans from unfair lending practices and invested $4.7 trillion dollars into our communities.
However, these laws are severely outdated and most big banks who originated faulty loan products that crashed our economy were not covered by CRA.
Over 80% of the high-cost subprime loans made between 2004-2007 were made by institutions not regulated by CRA and many of the predatory terms that brought on the mortgage crisis are not disclosed in HMDA.
For too long, Wall Street and Big Banks have been allowed to play by their own rules. And the American people have yet to see any significant financial reform that could reign in big bank greed.
Unfortunately, it’s not surprising. Big banks continue to spend millions to lobby Congress to block any bills that would stifle their massive profits and make our economy more secure.
Two laws passed in the 70s, however, created an affirmative obligation for banks to invest in all communities (regardless of race) and disclose information on their lending practices: the Community Reinvestment Act (CRA) and the Home Mortgage Disclosure Act (HMDA).
CRA and HMDA worked together to protect Americans from unfair lending practices and invested $4.7 trillion dollars into our communities.
However, these laws are severely outdated and most big banks who originated faulty loan products that crashed our economy were not covered by CRA.
Over 80% of the high-cost subprime loans made between 2004-2007 were made by institutions not regulated by CRA and many of the predatory terms that brought on the mortgage crisis are not disclosed in HMDA.
Solution:
Regulate the Big Banks
Wall Street banks need to play by rules that will help build wealth for our communities.
But, this is only going to happen when the Regulators and Congress take the steps to effect real change. Some needed reforms include:
Wall Street banks need to play by rules that will help build wealth for our communities.
But, this is only going to happen when the Regulators and Congress take the steps to effect real change. Some needed reforms include:
- Modernize the Community Reinvestment Act (CRA). This will increase transparency, accountability and stability in the financial system and our economy.
- Modernize the Home Mortgage Disclosure Act (HMDA) to include crucial information like interest rate, fees, and other terms of the loans made to homeowners.
- Outlaw payday lending with strict interest rate caps
- Break up the Big Banks by instituting asset caps and putting the firewalls back between banking and investment services.
