WASHINGTON, June 22 -- The House Banking Committee voted Thursday to exempt small urban banks from the Community Reinvestment Act. The committee is considering a bill that would substantially deregulate banks and would repeal or change portions of the Truth in Savings Act, the Truth in Lending Act and the CRA. On a largely party line vote, the panel approved an amendment that would extend the bill's CRA exemption for rural banks with less than $100 million in assets to small urban banks as well. Democrats argued that the CRA exemptions would gut the one federal policy remaining that funnels investments back into poor and minority communities. The CRA requires that banks licensed in a community provide credit and depository services in that community. 'The people in black and brown communities don't have banks, they have check cashing services,' said Rep. Joseph Kennedy, D-Mass. 'There is covert prejudice that the CRA tries to deal with.' 'Exclusion, racism and discrimination still exist,' said Rep. Maxine Waters, D-Calif., who said she was tired of hearing constantly that blacks are poor because they don't work hard. Rep. Jerry Weller, R-Ill., said the regulations are not needed because banks must invest in their neighborhood or they will die. Weller said complying with CRA regulations cost U.S. banks $1 billion a year. 'Corporate America and the banks are not reinvesting in America,' said Rep. Bernie Sanders, I-Vt. He said banks earned a record $43 billion profit last year, but are grousing about having to reinvest deposits back in the working class and middle-class neighborhoods where they came from. Rep. Sonny Bono, R-Calif., asked the Democrats if they had something against people getting rich.
'I'm rich and I worked hard for my money,' Bono said. 'I've got mine and I shouldn't have to share it with anyone.' 'Some of us didn't have her, babe,' joked Rep. Floyd Flake, D-N.Y., referring the hit song 'I Got You Babe,' which Bono wrote and performed with his then-wife, Cher. The song describes the joys of love amid abject poverty. 'Making money is good, but sometimes banks make mistakes,' said Rep. Barney Frank, D-Mass. Frank argued that the CRA is needed more than ever because technology is making it easier for banks to take deposits from one neighborhood and invest them in projects or securities on the other side of the globe. Chairman James Leach, R-Iowa, said the committee had been moving at a turtle's pace on the bill and vowed to hold the committee in session until midnight on Tuesday and Wednesday if necessary to complete action on the bill. Several controversial areas remain to be debated, including a potential landmine that could sink the bill: insurance powers of banks. The current bill includes a provision that would place a moratorium on banks gaining new powers to sell insurance. The bank industry could pull its support for the deregulation bill if the provision is not removed. But if it is removed, the powerful insurance lobby may act to kill another banking bill that would repeal the Glass-Steagall Act prohibitions on banks selling securities. The Senate has not yet begun to act on either banking bill.