Financial Services Bill and the CRA

Re “The CRA Under Attack,” editorial, April 22: The Financial Services Modernization Act was written to remove the last of the barriers between banking, securities and insurance. Far from being prohibited, as you suggested, this broader access to financial services is already available under the regulations covering bank and S&L; holding companies.

Ever since the Community Reinvestment Act was enacted, it has been justified as a mandate for banks and S&Ls; because these institutions enjoy the protection of federal deposit insurance. Neither the securities industry nor the insurance industry has a similar government-sponsored benefit, so I don’t believe that it’s right to add a government mandate like CRA to their activities, whether they’re affiliated with a bank or not.

Nor do I believe it’s right to place CRA requirements on small rural banks. The bill would remove the CRA burden on banks with less than $100 million, as long as they’re outside a metropolitan statistical area. I also want to curb the unsavory practices of protesters who file complaints under CRA regulations and pursue them until they are paid cash to stop protesting. Those who protest against banks with excellent CRA records should have to show some evidence of noncompliance before they can stop a bank from opening a branch or merging.

PHIL GRAMM, Chairman

U.S. Senate Banking Committee

Washington