In 1977 the price of a first-class stamp was 13 cents, and CD was just a shorter name for certificate of deposit. Clearly, times have changed dramatically over the past three decades. In fact, it is difficult to think of an aspect of our lives that has not been improved through technological advancements and new innovation.
One area that every consumer has benefited from is the increase in access to a wide variety of financial products and banking services.
Improvements in research and marketing, the explosion of the Internet and online banking, and a huge increase in the number of companies offering access to low-cost credit have made it easier than ever for Americans of all income levels to open a bank account, take out a home loan, or borrow money for college tuition.
Unfortunately, while these advances have been transforming the banking industry, Congress and federal regulators have lagged behind, unwilling to adapt to a new and dynamic marketplace.
One of the most egregious examples of this foot-dragging is the regulations stemming from legislation dating back to 1977, the Community Reinvestment Act.
The CRA was enacted in response to allegations at the time that some financial institutions were deliberately ignoring the banking needs of specific sections of their communities. Activists argued that many banks did not view these particular areas as profitable lending opportunities, and thus did not extend their services to the residents of these neighborhoods.
Few would argue that such discriminatory behavior never took place. However, it is clear that the remedy to this problem has grown to be far worse than the disease.
The original intent of CRA was to direct the federal banking regulators to simply encourage financial institutions to "meet the credit needs of the local communities in which they are chartered."
While that is a noble goal, the regulations have been expanded and redefined far beyond the original statutory intention.
Like many federal regulations, CRA has morphed to the point where federal regulators are often the ones who determine how a financial institution should serve its community, ignoring the fact that the …