Under initial disclosure requirements, banks were required to report minimal data about the geographic location of home loan approvals and purchases. Additional legislation expanded and refined these disclosure requirements. In 1977, Congress approved the Community Reinvestment Act (CRA), which required lending institutions to meet the credit needs of the communities in which they operated and linked community lending records to approval of merger applications. 181 In 1980, Congres s approved the Ho using and Community Development Act, which directed the Federal Financial Institutions Examination Council to serve as a central clearinghouse for mortgage lending data. 182 Finally, in response to the savings and loan crisis of the 1980s, Congress approved in 1989 the Feder al Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), 183 which sought to stabilize and provide new oversight for the savings and loan industry. Community reinvestment groups lobbied succes sfully to include improvements in disclosure, such as reporting of applications as well as loans; reporting of the race, sex, and income of borrowers and applicants; and reporting by a broader range of mortgage lenders. 184
As Congress expanded the scope and depth of this transparency system, it gained wider use. Advocacy groups used mortgage lending data to document constraints on credit in their communities and to negotiate new mechanisms for low-income lending with individual banks. Broad-based community reinvestment task forces in Washington, Rhode Island, New Jersey, and Michigan forged partnerships among community organizations, lending institutions, and state and local governments to address access problems. Investigative reporters, financial analysts, and intermediaries used the information to document pervasive patterns of discriminatory lending and the exodus of banks from low-income neighborhoods. In 1988, for example, the Atlanta Journal-Constitution reported on widespread redlining in that city in “The Color of Money,” a series of articles that received extensive national attention. 185
In 1992, the Boston Federal Reserve conducted a rigorous study that concluded that race had a strong influence in lending decisions. 186 The study received broad media coverage, confronting banks with discrimination allegations from a particularly authoritative source.
As they responded to a wave of requests for bank mergers in the late 1980s and 1990s, federal regulators also employed mortgage lending data in deciding whether to grant approvals. The banking industry was shaken in 1989 when the Federal Reserve Bank first exercised this power by denying a merger request from Continental Illinois National Bank and Trust Company of Chicago on the ground that the bank had not met its community reinvestment requirements. Advocacy g roups that tra cked the perfo rma nce of particular banks often petitioned regulators to turn down merger requests if their performance indicated unfair lending practices.
This shift in the competitive environment led many more banks to improve lending practices in the 1990s. 187 The competitive shift resulted in part from mortgage lending disclosure and the requirements of the Community Reinvestment Act, as well as from the proliferation of sophisticated community organizations that had developed the expertise to understand bank lending patterns and negotiate with financial institutions. More banks developed products, divisions, and methods to compete in low-income markets, and bankers acknowledged that disclosure and community reinvestment requirements had proven less burdensome than expected. 188