A stronger Community Reinvestment Act (CRA)
March 2021 update: Our comment to the Federal Reserve Board of Governors in response to their Advanced Notice of Proposed Rulemaking argues that racial equity must be a CRA mandate and that low and moderate income individuals, especially those who are people of color, must be prioritized over place when evaluating banks for CRA. Mandating racial and ethnic demographic data collection is crucial to this effort. To that end, we also signed onto NCRC’s letter to the Fed urging for a more race-conscious CRA. We believe the greatest emphasis in a CRA evaluation should be on community input so that banks can be truly responsive to what those in their assessment areas determine are the economic development priorities. We emphasize quality over quantity in terms of product design, service, and delivery.
April 2020 update: In the midst of the COVID-19 pandemic, we continue to advocate for a suspension of rulemaking while our communities struggle for their livelihoods during this crisis. Our comment on the Notice of Proposed Rulemaking outlines how the CRA can be strengthened to deepen investment in low and moderate income communities and communities of color. We urge regulators to apply a racial equity lens to CRA, to prioritize communities of color per the intent of the law, to maintain emphasis on community context and input, and to meaningfully penalize banks when they cause harm.
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.
A strengthened CRA
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.
Our CRA advocacy efforts to date
- Joint Beneficial State Bank and Beneficial State Foundation regulatory comment in response to the Fed’s Advanced Notice of Proposed Rulemaking (February 2021)
- Sign-on to NCRC letter urging the Fed for a more race-conscious CRA
- Joint Beneficial State Bank and Beneficial State Foundation regulatory comment in response to the OCC and FDIC Notice of Proposed Rulemaking (April 2020)
- Urge regulators and lawmakers to suspend the regulatory comment period during COVID-19
- Joint Beneficial State Bank and Beneficial State Foundation regulatory comment in response to the OCC’s Advanced Notice of Proposed Rulemaking on CRA reform (November 2018)
- Endorsement of the US Conference of Mayors’ resolution in support of CRA
- Meet with bank regulators to discuss equitable CRA reform
- Op-ed in American Banker: OCC should improve CRA, not gut it
- Participate in the National Community Reinvestment Coalition’s ongoing #TreasureCRA campaign