Banking On the Poor

Allegiant Stadium, future home of the Las Vegas Raiders, under construction

Allegiant Stadium, future home of the Las Vegas Raiders, under construction
In an effort to lessen the effects of the 2008 recession, the federal government infused $700 billion into the big banks, essentially buying up or insuring bad loans, and enabling those financial institutions to start lending to us little people, whose homes were either underwater or lost, thanks to sky-high balloon payments. It was a sweetheart deal for wealthy banking executives, first because of the federal bailout itself, and second, because no one policed their good faith agreement to lend money to those who needed it the most. If you were outraged by that blatant example of taxpayer-funded corporate welfare, get ready for 2020, and President Trump’s new spin on the Community Reinvestment Act.

The CRA was enacted in 1977 to make sure that banks lent money for homes and businesses in impoverished communities. In return, the banks would receive big tax breaks. Fair enough, however, several weeks ago, two agencies under the Trump administration (the FDIC and the Office of the Comptroller of the Currency) announced proposed changes to CRA which don’t pass the smell test. According to a report by Bloomberg’s Noah Buhayar and Jesse Hamilton, one of those changes allows banks to meet their CRA obligations to the poor if they simply finance improvements to athletic stadiums in a government designated “Opportunity Zone”.

Oregon Senator Ron Wyden isn’t buying the stadium scam, saying, “There are no safeguards to ensure taxpayers are not simply subsidizing handouts for billionaires, with no benefit to the low income communities this program was supposed to help.” Wyden’s warning is, pardon the expression, right on the money. That’s because most of America’s most impoverished cities have one or more taxpayer-funded sports stadiums. M&T Bank Stadium in Baltimore recently completed $120 million dollars worth of improvements. Meanwhile, taxpayers in Cincinnati, Indianapolis, and Minneapolis paid for stadium renovations to the tune of $424 million, $600 million, and $678 million dollars respectively. It’s a great deal for billionaire team owners who get to hold onto their wealth and, at the same time, profit from improvements to their stadium. It gives a whole new meaning to the term “home field advantage”.

To be fair, the proposed CRA regulations also give tax breaks to banks who finance new factories, something which could, in fact, benefit poverty-stricken areas. But it’s a stretch to believe that renovating NFL stadiums will do anything to alleviate hunger or sub-standard housing. As Buhayar and Hamilton noted, the proposed credit for refinancing improvements calls into question, “whether banks can satisfy CRA obligations by funding, say, a 200-foot video screen.” One thing’s for sure, though. Poor people can’t even afford the price of admission to be able to sit in a renovated stadium and see that video screen. What they can see, however, is financial assistance bypassing them, and being offered freely to billionaires who don’t need it.

It’s the age-old irony that banks only lend money to people who already have money, i.e., the rich keep getting richer. But if Trump’s proposed changes to CRA are enacted, the real irony is that the banks themselves will get richer, in this case, from a tax program designed to help the poor. Instead of a credit, there should be a penalty for such behavior. In football, we call it “illegal procedure”.


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