Banker and Tradesman: OCC Drops Trump-Era CRA Reform

Banker and Tradesman, July 22, 2021, OCC Drops Trump-Era CRA Reform

The yearslong effort to update the Community Reinvestment Act will continue, this time with the three federal banking regulators working together, a move supported by both banks and community organizations.

The Office of the Comptroller of the Currency said in a statement Tuesday that it would propose rescinding the CRA rule that it had issued last year, instead working with the Federal Reserve Board and the Federal Deposit Insurance Corporation on a joint rule to update the CRA.

The OCC had announced in May that it was reconsidering the OCC’s 2020 CRA regulations.

“While the OCC deserves credit for taking action to modernize the CRA through adoption of the 2020 rule, upon review I believe it was a false start,” Acting Comptroller of the Currency Michael Hsu said in Tuesday’s statement. “This is why we will propose rescinding it and facilitating an orderly transition to a new rule.”

Adopted in 1977, the CRA had not been revamped since 1995. The regulations encourage financial institutions to meet community credit needs, including in low- and moderate-income neighborhoods, and prevent discrimination through redlining.

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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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