Here, we turn to Treasury’s proposed changes to the Community Reinvestment Act (CRA).  As detailed below, Treasury’s report was largely confined to changing CRA regulation, not the law.  Although Republicans who believe that GSE affordable-housing requirements led to the financial crisis also argue that CRA distorts credit-allocation and investment decisions, even FinServ Chairman Hensarling (R-TX) has been reluctant to tackle CRA.  Democrats are strongly behind the law and, even if it could be amended or repealed in spite of this, many home-town groups have become accustomed to bank community-level activities that might stop or drop if statutory requirements are substantively revised.  Treasury’s CRA recommendations will, opponents say, have the same result, but Administration-appointed regulators could accomplish them without the personal political fall-out feared by Members of Congress.  Even so, Treasury is moving carefully, advocating now only CRA study, not specific reforms.

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