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CRA And The Kennedy Legacy
How could the Community Reinvestment Act, a law passed well over a decade after the assassination of President Kennedy, be considered a part of the Kennedy legacy? Believe it or not, CRA is an outgrowth of policies that President Kennedy began.
To see the connection, we have to set aside our current obsession with counting loans and marking and measuring where they go. We need to overlook the definition of "community development loan" and "assessment area." We have to go back beyond all of the technical infrastructure we have built around the concept of reinvesting in our communities. We look at the purpose of CRA.
During his administration, President Kennedy put into place a plan and a system for fighting and changing the course of poverty throughout the United States. The poorest areas, such as Appalachia, were identified as regions for redevelopment. He also established an agency to plan and oversee the redevelopment of poverty-stricken areas.
Under President Johnson, Kennedy's lead agency in the War on Poverty was restructured and renamed the Economic Development Administration. As an agency, EDA was responsible for identifying the poorest counties in the United States and creating development plans to reverse the poverty trends in those areas.
My career began at EDA, learning about economic need and also learning about how little we knew about changing the poverty trap. As I look back, I see in the early efforts of the Kennedy and Johnson administrations, the foundations of CRA. In the '60s, Americans had the nerve to try to make things better - for everyone. The goal was better homes, better jobs, better schools, better food - a better life for all Americans. The goal was change. EDA was one tool for causing and managing this change.
It was an exciting place to be and an exciting time. We looked at poor and underdeveloped parts of this country and tried to pull together people, resources, and ideas to bring opportunity to those areas. In some parts of the country, the effort was remarkably successful. Other areas still struggle.
The work is on-going. The Appalachian Regional Commission is still in business, making a difference in peoples lives. Other organizations, such as the Tennessee Valley Authority carry on the same work. There are opportunities for banks working with these organizations to participate in projects that affect an area's economy.
There is an important message here that we overlook when we obsess on geoanalysis and determining the proportions of loans and investments that benefitted low- and moderate-income people. The real goal, the goal that President Kennedy set almost four decades ago, was to create avenues for people to move from poverty into middle and upper income. In short, the idea is to get away from poverty, to do away with poverty. It is much more difficult to evaluate success at this than to measure success by how many LMI people are in some way connected with a loan or investment.
Measuring CRA performance the way we do can be misleading. The question we have to answer to "pass" CRA exams is "did the loan go to a low- or moderate-income borrower?" The important question is: "Will the loan or investment make a difference?"
The recent crash of John Kennedy, Jr.'s plane is an event that should cause us to review where we stand on CRA, an outgrowth of his father's work. In his chosen, private, and effective way, John Kennedy, Jr. supported the types of activities that would improve the lives of many people, especially people in any kind of need. He was committed to change and worked hard to make life better. How better to honor his memory than to do a good job at CRA and really make a difference in our communities?
Copyright © 1999 Compliance Action. Originally appeared in Compliance Action, Vol. 4, No. 10, 8/99
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