Civil rights, fair lending and consumer rights organizations call on the Federal Reserve to strengthen the Community Reinvestment Act

More than 100 national and local civil rights, fair lending and consumer rights organizations have urged the Federal Reserve to strengthen the Community Reinvestment Act (CRA), a key anti-redlining and civil rights law. In detailed comments that addressed issues from access to credit, location of bank branches and investments in underserved communities, the groups laid out a plan for the Biden Administration to leverage CRA to ensure an equitable recovery from the ongoing economic, racial justice and public health crisis.

To read the joint comment letter signed by over 100 organizations, visit: http://bit.ly/100GroupsCRA

To read detailed comments submitted by NCRC, Grounded Solutions Network, National Neighborworks Association, NAACP, National Association of Real Estate Brokers, National CAPACD and National Urban League visit: http://bit.ly/ncrccracomment2021

To read the comment letter urging the Federal Reserve and other banking regulators to strengthen the implementation of CRA to address ongoing systemic inequity in credit access for communities of color visit: http://bit.ly/craorgcomment2021

The comments, submitted in response to the Federal Reserve’s Advance Notice of Proposed Rulemaking on CRA, urged regulators to require that CRA exams consider lending to people of color and investments in communities of color and strengthen grading mechanisms to stop grade inflation. The groups said that enhancing the rigor of CRA exams is needed if communities are to recover in an equitable manner from the pandemic. 

Groups from across the country also urged the Federal Reserve to work jointly on a uniform set of rules with the other two agencies that enforce compliance with the law, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (OCC). Last year, the OCC enacted much weaker CRA rules. NCRC and the California Reinvestment Coalition have since sued the agency to cancel them.

“The Fed is off to a much better start toward meaningful improvements to how CRA is enforced, but its proposal must be strengthened to increase lending to people of color and investments in communities of color,” said Jesse Van Tol, CEO of NCRC. “CRA can and should be better targeted to Black, Brown and Native American communities and it should ensure that banks are doing the hard work necessary for communities of color to thrive. We appreciate the Fed asking specifically about how to address this, and we are hopeful that new rules reflect this continued commitment.”

“National NeighborWorks Association (NNA) applauds and appreciates the direction that the Federal Reserve has provided in their ANPR,” said Lou Tisler, Executive Director of NNA. “This comment letter that we join with NCRC, as well as changes proposed by our members and colleagues, will give even greater direction for banks to better serve our communities, provide greater access to capital and investment in historically underserved communities, and put ‘Community’ back into the Community Reinvestment Act.”

“The Community Reinvestment Act, from its inception, was intended to address racial bias and systemic inequities that continue to exist today,” said Seema Agnani, Executive Director of the National CAPACD. “Now is the right time to reform CRA to further strengthen its ability to drive investments, resources and support towards the communities and neighborhoods that are most impacted by these inequities, as well as to address new technologies in banking. We are pleased to join our national partners to call upon the Federal Reserve and other regulators to ensure we have a strong and effective CRA dedicated to its originally intended purpose.” 

“Financial institutions must become pro-active, year-round partners and serve all segments of the communities where they conduct business,” said Lydia Pope, President-elect, National Association of Real Estate Brokers. “Community members’ opportunities cannot be timed to meet a bank’s regulatory requirement to show partnerships and lending patterns. Fair lending patterns should be evident throughout the institution’s presence in the community they presume to serve.” 

“While the CRA has encouraged significant community investment, the law has fallen short in serving the credit needs of communities of color and in rectifying mortgage and small business lending gaps. We are encouraged by the Fed’s focus on racial equity, fair lending, and ensuring that CRA credit is focused on meeting community needs. We urge the Fed to ensure that new rules live up to the law’s mission, including addressing the destructive legacy of redlining and ongoing systemic inequities,” said Melissa Stegman, senior policy counsel at the Center for Responsible Lending.

“The failure of the financial services industry to serve the needs of all consumers is a key driver of the racial wealth gap,” said Odette Williamson, Attorney at the National Consumer Law Center. “We are encouraged that the Federal Reserve Board recognizes and seeks to address ongoing systemic inequity in credit access for individuals and communities of color. Strengthening the Community Reinvestment Act is a critical component of ensuring an equitable recovery for communities suffering the brunt of the economic fallout from the pandemic.”

“The ongoing economic crisis spurred by COVID-19 underscores the need to further strengthen the Community Reinvestment Act to ensure that low- to moderate-income communities and neighborhoods of color are not left out of the recovery, but are able to emerge stronger and more resilient,” said Lisa Rice, President and CEO of the National Fair Housing Alliance. “It’s important and promising that the Fed is opening a dialogue about how to improve CRA’s effectiveness as a tool to fight redlining and other forms of systemic inequity, as Congress intended back in 1977. But that’s just a first step. Next, the Fed must follow through. It must take a forceful and affirmative approach to strengthening the CRA to help expand financial opportunity for millions of people of color and advance financial equity, which will benefit our entire economy.”

“U.S. PIRG Education Fund welcomes the Fed’s approach to engage with community groups in its proposal to strengthen the Community Reinvestment  Act, a critical civil rights law,” said Ed Mierzwinski, senior director for federal consumer program, U.S. PIRG Education Fund. “After all, the 1977 CRA was written to strengthen lending and investment to communities of color by stopping redlining to those communities; but much more needs to be done by the banks to close the racial wealth gap, especially since it has been worsened by a pandemic.”

“We join NCRC and other national partners in thanking the Federal Reserve for critically contemplating how CRA can be more effective in the ANPR,” said Tony Pickett, CEO of Grounded Solutions Network. “This comment letter provides important feedback to the Federal Reserve Board on how CRA can be strengthened further to serve communities by advancing economic and racial equity, which will be vital in achieving an equitable recovery from the devastating impacts of the pandemic.”

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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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