Washington, DC – A new study released today by the National Community Reinvestment Coalition (NCRC) found that banking industry proposed changes to the Community Reinvestment Act (CRA) would allow midsize banks to circumvent federal requirements to lend and invest in low and moderate income neighborhoods.

These proposed changes would endanger billions in affordable housing and community development investment.

The Independent Community Bankers Association and other stakeholders have recommended proposals to eliminate or weaken the Community Development test within the CRA exam for midsize banks (approximately $300 million to $1.2 billion in assets). Under the current requirements, they lend and invest nearly $3 billion annually for affordable housing and community development in low and moderate income neighborhoods.

NCRC’s new analysis concludes that eliminating the community development test or diminishing its rigor would result in at least a 50% decrease in community development lending.

“This is a concrete example of how technical changes to the Community Reinvestment Act could have a devastating impact to working class families and neighborhoods,” said John Taylor, President and CEO of the National Community Reinvestment Coalition.

“Just to put this into context, historically, Congress has appropriated $3 billion to the Department of Housing and Urban Development’s flagship community development grant program, the Community Development Block Grant (CDBG). CDBG funds are allocated to states for local community development activities such as affordable housing and infrastructure development. Weakening this test within the CRA exam for midsize banks is like eliminating CDBG funding. We must stay vigilant, and ensure these proposed changes are not enacted into law.”

The Administration’s budget proposals to eliminate CDBG funding paired with dramatic changes to CRA exams for mid-size banks would be a double whammy for struggling communities, rural and urban, and would cost them about $6 billion in private and public financing annually.

To download the full study, click here. (PDF)

Chris Li

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