Civil rights and consumer advocacy groups support Federal Reserve steps to update CRA rules

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

Ceres Accelerator for Sustainable Capital Markets

Consumer Action

Credit Builders Alliance

Enterprise Community Partners

Hope Policy Institute

Latino Economic Development Center (LEDC)

Low Income Investment Fund

Manna Inc

NAACP

NACEDA

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

Prosperity Now

Strong Prosperous and Resilient Communities Challenge

The Greenlining Institute

The Leadership Conference on Civil and Human Rights

UnidosUS

Woodstock Institute

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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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