American Banker: Flexible boundaries and exams: how treasury would modernize CRA

American Banker, April 3, 2018: Flexible boundaries and exams: how treasury would modernize CRA

The Treasury Department released long-awaited recommendations Tuesday of reforms for enforcing the nearly 40-year-old Community Reinvestment Act.

The CRA, which grades financial institutions on their lending and other activities in low- and moderate-income neighborhoods associated with their market, has not been significantly updated since the Clinton administration.

The report calls for updates to how banks are examined for compliance, including the definition of geographic boundaries used for CRA exams. Treasury’s recommendations come as federal bank regulators have indicated they will soon release a proposal to reform CRA policy.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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