A stronger Community Reinvestment Act (CRA)
January 2020 Update: The FDIC and OCC have released a Notice of Proposed Rulemaking that seriously weakens the impact CRA will have on low and moderate income (LMI) communities, and communities of color — the very communities CRA was created to support. The proposal centers around a new CRA Evaluation Test, a uniform metric, that will incentivize banks to go after fewer, larger dollar projects, rather than focusing on the unique context of their communities. The proposal will allow banks to receive CRA credit for products like credit cards that have no guardrails for consumer safety and transparency. It could even give banks credit for making loans to stadiums in opportunity zones and other major facilities where the benefit to low income communities may not be demonstrated. Such development may be detrimental to these neighborhoods. The Center for Responsible Lending estimates that relaxing CRA requirements, as proposed, could lead to a 10-20% reduction in lending for LMI communities and a total loss of up to $105 billion in loans over a five year period.
See below to find out what you can do to stop this disastrous proposal from moving forward.
We recognize CRA, which was created as a direct response to redlining, as a critical tool to ensure all banks do what is required of them to address the local credit needs of the communities they serve. We see this as a minimum standard, when in fact banks should be striving toward an ideal of “benefit to all, harm to none.”
Unfortunately, CRA is under threat with “modernization” efforts fully underway for the first time in 40 years. Undermining CRA when there is still rampant and pernicious discrimination in lending is detrimental to communities already struggling with disinvestment and racist policies.
We join with financial reform advocates to push for meaningful changes that make banks more accountable to communities – not less – and for effective penalties when banks and other financial institutions neglect their responsibilities or engage in discriminatory or criminal activities.
What can you do?
Send a comment to regulators to let them know how flawed the pending FDIC/OCC proposal is by March 9, 2020. Find a sample template and instructions on how to submit here.
Our CRA advocacy efforts to date
- Joint Beneficial State Bank and Beneficial State Foundation regulatory comment in response to the OCC’s Advanced Notice of Proposed Rulemaking on CRA reform
- Endorsement of the US Conference of Mayors’ resolution in support of CRA
- Meet with bank regulators to discuss equitable CRA reform
- Participate in the National Community Reinvestment Coalition’s #TreasureCRA campaign