After Redlining by Rebecca K. Marchiel

Author:Rebecca K. Marchiel [Marchiel, Rebecca K.]
Language: eng
Format: epub
Tags: HIS000000 History / General
Publisher: The University of Chicago Press
Published: 2020-09-02T00:00:00+00:00

Urban Reinvestment through the Federal Home Loan Bank Board

Many leaders of the nation’s savings and loans watched NPA’s CRA organizing with concern. During the legislative campaigns for HMDA and for the CRA, Savings and Loan News reported regularly on NPA’s protests, and executives worried that Congress showed too much support for urban agitators who didn’t understand the problems facing their industry. The new reinvestment regulations posed further obstacles to thrifts as they continued to struggle under 1970s inflation. As many in the industry had feared throughout the decade, the new regulatory push toward urban reinvestment might create cumbersome new rules that would force many thrifts to tie their fates to nearby communities that seemed to be on the decline. This possibility emerged right at the moment when most thrift executives were arguing that the industry instead needed new powers and privileges to survive the threats that inflation and commercial bank competition posed for their institutions.

During the spring of 1978, the US League of Savings Associations called on all savings and loan executives to become political—if they hadn’t already. “The biggest single problem our business has,” said US League public relations director William O’Connell, “is its political vulnerability.”9 The US League argued that their own policy goals and those of urban America were at odds. Before Carter announced his urban program in March of 1978, the league listed Carter’s urban policy as one of the most important legislative issues facing the industry that year, understanding that savings and loans would likely have a mandated role to play. It warned members that “the initiatives will represent a response to intense pressures from black and liberal groups to ‘do something’ about inner-city decay.”10 By that fall, Savings and Loan News devoted twenty-two pages of its newsletter to instructions on how thrift executives could “Get Involved!” in “political action,” with articles profiling new members of Congress, tables listing the members of the key congressional committees, and instructions on how to do their own “grass-roots organizing.” The impacts of reinvestment activism, as well as other new consumer protections, were visible in the opening paragraph of the segment. “Unused mortgage disclosure reports, impractical loan settlement procedures, meaningless truth-in-lending data, anti-discrimination regulations” and more. . . . “Enough!” The “ill-conceived legislation” and “over-zealous regulation” had to end, the league told its members. It was time for members of the savings and loan community to “become active in local elections, in party organization, in fund raising, and in policy deliberations”11 to take momentum away from the reinvestment movement and other organizations that threatened to turn thrifts into urban social service providers.

As the US League began its efforts to better educate its members about the political process, it paid close attention to changes within its regulator, the Federal Home Loan Bank Board. Indeed, what urban reinvestment would look like for the nation’s thrifts would be shaped not only by thrifts’ capacity to shape legislative debates but also by the leadership of the FHLBB chairman during the late 1970s, when the CRA had just been passed and the reinvestment movement reached its peak of influence.

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