HR 1066, Depository Institution Community Development Investments Enhancement Act

In general, the Home Owners Loan Act is amended to allow federal savings institutions to make investments (presumably risky or bad ones) to "promote the public welfare". These investments can be made directly or through proxies. Liabilities may not be unlimited. Some bureaucrat will determine aggregate and individual spending caps for these loans; what look like provisional numbers for this purpose are then laid out. No restriction is placed on just how bad the loans can be. All other standards for federal investments must still be followed (i.e. paperwork, non discrimination, etc.)

Analysis: This allows federal savings institutions to give out bad loans to poor people. It does not require them, but I can visulize a situation in which they are pressured into giving them.

Comments: On one hand, this bill frees up a federal institution to provide charity loans, just like private banks are able to. However, simply having the discretion of a private bank does not mean federal institutions will have the same, or even a similar incentive structure. If Rep. Frank (the sponsor) wants to give out charity, I would recommend that he start the Barney Frank Savings and Urban Development Fund and raise private money for the inner cities. The issue is that instead of sending me a letter asking if I would like to support a foundation to provide bad loans, he is using the entire apparatus of the Federal government to require me to support such a foundation. Let me be clear, I wholly endorse semi-charities like non-profits who give out loans to poor communities. What I do not endorse is coersion.

Because this bill uses unjust means to support an otherwise noble cause, I would endorse a vote of NAY.