Capitalism Doesn’t Bend

This chapter explores how communities advocate for themselves in the midst of large bank mergers, focusing on the KeyBank–First Niagara merger that was completed in 2016 with a $16.5 billion benefits agreement. The concomitant rise of bank mergers and benefits agreements demonstrates how communities are increasingly voicing their opinions and trying to secure economic investments. However, much like the system of securitization, benefits agreements bundle the rights of future revenues into short-term deals that are sold to communities for banks’ and their shareholders’ long-term profits. Benefits agreements can exploit marginalized communities to proffer evidence of the banks’ compliance with the Community Reinvestment Act in exchange for only minimal economic investments.

Role of the Community Reinvestment Act in Mortgage Supply and the U.S. Housing Boom

This paper studies the role of the Community Reinvestment Act (CRA) in the U.S. housing boom-bust cycle. I find that enhanced CRA enforcement in 1998 increased the growth rate of mortgage lending by CRA-regulated banks to CRA-eligible census tracts. I show that during the boom period house price growth was higher in the eligible census tracts because of the shift in mortgage supply of regulated banks. Consequently, these census tracts experienced a worse housing bust. I find that CRA-induced mortgages were awarded to borrowers with lower FICO scores and were more frequently delinquent.