Even in the midst of the nation’s financial sector meltdown prompting a societal march toward a long and deep economic recession, far too many people who should know better have decided to blame the Community Reinvestment Act for the subprime foreclosure crisis and the implosion of commercial banks and mortgage brokers.

The nonprofit sector knows better—and had better get on the stick to advocate against efforts to weaken this absolutely vital component of national policy. Enacted in 1977 “to encourage depository institutions to meet the credit needs of lower-income communities” (emphasis added),[i] CRA became a crucial tool for reversing the prevalent banking practice of racial and geographic “redlining.”

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A bailout package is ready to be voted on by Congress, but that doesn’t obviate the concerns of Nonprofit Quarterly readers who by and large believe that the bailout and the conditions that led to it reveal something fundamentally wrong about our society. The so-called Troubled Assets Relief Program (TARP) may even be necessary to jumpstart liquidity and credit in the financial sector, but it is for many a bitter pill to swallow.

We asked NPQ readers to “sound off” on the bailout, and boy did they ever. Rather than moaning about the loss of potential philanthropic grants from now semi-comatose or dead Wall Street behemoths, NPQ’s commentators went to the heart of the issue. They know that no amount of charitable grantmaking from Fannie Mae, Freddie Mac, Bear Stearns, or Lehman Brothers makes up for the shortfalls nonprofits face everyday as a result of long-term disinvestment in the systems on which the least well off Americans depend.

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Should the nonprofit National Football League be exempt from IRS 990 salary disclosure requirements? Apparently the NFL thinks it deserves its own unique exempt tax status, maybe 501(c)(”m” for monopoly), allowing it to report on what it thinks is important for the public to know and withhold what might make the public a little upset with the nonprofit trade association of sports barons.

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Poor Angelo Mozilo’s Countrywide Financial Corporation has had to sell everything, including the proverbial kitchen sink, to the Bank of America for $4 billion, $20 billion less than its estimated value only a year earlier.  The woes of the nation’s largest subprime mortgage lender have helped destabilize the homeownership futures of millions of families facing foreclosure due to exploding “adjustable rate mortgages;” the stock market which appears to be on a roller coaster ride downward; and the entire U.S. economy which seems to be heading toward a recession primed by the subprime mortgage crisis. And, there’s plenty in the subprime mortgage foreclosure crisis that directly concerns nonprofit organizations.

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Editors’ Note: Readers should be aware that as this article was going to press the death of Kenneth Lay was announced. This adds another complex wrinkle to the case, while the issues raised by the article remain the same.

The Enron Mega - Scandal reached its climax with the convictions of Kenneth Lay on six counts and Jeffrey Skilling on 19 counts, but these dealt only with the business transgressions —the criminals’ (we can call them that now) lesser known “charity” manipulations escaped most public attention. The media has referred periodically to the “philanthropy” of Ken Lay and other principals, signifying a positive balance on the other side of the ledger—some good works to offset the phenomenal harm resulting from their bad behavior.

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