The regulatory reform proposal released today by Chairman Dodd (D-CT) goes a long way to ensuring that consumers and communities across the country have access to safe, affordable, and sustainable financial products.   We believe that the proposal brings us closer to ending the assumption that some financial institutions are too big to fail, protecting the financial system against systemic risk, creating a single federal banking regulator, and enforcing the consumer protections that have gone unenforced for far too long.
 

The proposal also establishes a strong Consumer Financial Protection Agency with the authority to implement a modernized Community Reinvestment Act (CRA)–a critical step to rooting out the financial industry’s worst practices.   With  foreclosures and vacant properties on the rise and property values on the decline in the Chicago region and throughout the country, we believe the best way to move forward is to protect consumers from predatory products and discriminatory practices.  As the CRA has demonstrated, safe and sustainable loans build stronger communities.  Likewise, when consumers can choose safe financial products, their communities are unquestionably better off.

This is a key provision, and one that was left out of the bill creating a Consumer Financial Protection Agency currently being debated in the House.  In July 2009, Woodstock Institute hosted an issue briefing and call to action for Illinois community investment stakeholders concerned that existing bank regulators were not effectively implementing the CRA.  The event resulted in thirty organizations contacting Chairman Dodd and requesting that CRA implementation be transferred to a consumer financial watchdog.   

Woodstock Institute thanks Chairman Dodd for his commitment to the Community Reinvestment Act and looks forward to working with him on the passage of these necessary reforms.