On Monday, the Federal Reserve Board of Governors approved a process to revise the rules banks must follow to comply with the Community Reinvestment Act (CRA), and an Advanced Notice of Proposed Rulemaking (ANPR) to begin that process.
A coalition of civil rights, consumer and community organizations has responded with cautious optimism and a general sense that the Fed’s ANPR is more thoughtful than the unworkable CRA rules finalized earlier this year by the Office of the Comptroller of the Currency (OCC).
Unlike the OCC, the Fed has focused on transparent data analysis and qualitative measures of impact on communities, rather than on simplistic formulas that are easy to manipulate. CRA will be essential to ensure loans and investments from banks reach the lower-income communities and communities of color that have been especially hard hit by the coronavirus pandemic.
CRA requires lending in communities that suffered intentional and explicit exclusion from banking services in the past, through a government-sanctioned system known as redlining. CRA was enacted in 1977 to put an end to redlining and to ensure lenders served all communities where they took deposits. The Act led to more than $4 trillion in bank lending, investments and philanthropy in underserved communities since 1996.
Neighborhoods that were redlined in the 20th Century are still poorer, and now they are disproportionately suffering and at greater risk from COVID-19. There is a clear link between lending and housing discrimination in the past and today’s patterns of poverty and disinvestment.
The Federal Reserve Board appears to be listening carefully to all stakeholders and aiming for new rules that could be a model for a uniform approach by all the banking agencies.
This statement was jointly issued by:
Association for Neighborhood & Housing Development (ANHD)
Beneficial State Foundation
California Reinvestment Coalition
Ceres Accelerator for Sustainable Capital Markets
Credit Builders Alliance
Enterprise Community Partners
Hope Policy Institute
Latino Economic Development Center (LEDC)
Low Income Investment Fund
National Association for Latino Community Asset Builders
National Association of Real Estate Brokers (NAREB)
National Community Reinvestment Coalition
National Fair Housing Alliance
National Housing Conference
National NeighborWorks Association
National Urban League
Natural Resources Defense Council
Neighborhood Housing Services of Los Angeles County
Opportunity Finance Network
Strong Prosperous and Resilient Communities Challenge
The Greenlining Institute
The Leadership Conference on Civil and Human Rights