by George J. Benston

About the author: George J. Benston is the John H. Harland Professor of Finance, Accounting, and Economics of the Goizueta Business School at Emory University, and a member of the Shadow Financial Regulatory Committee, a private group of academic economists and lawyers who specialize in financial services.

Congressional attempts to enact banking and financial services reform in recent years have stumbled over the Community Reinvestment Act. That act originally was meant to deal with "redlining," the alleged refusal of banks to lend to residents of poorer urban, often racial-minority areas. But critics maintain that qualified applicants do not, in fact, suffer unwarranted discrimination and that CRA simply adds to the costs of banking, in the end often harming the very consumers the act was meant to protect.

CRA, enacted in...