Community Reinvestment Act Q&A Document Falls Short

Washington, DC – Today, in reaction to the newly released final revisions to the Interagency Question and Answer (Q&A) document regarding the Community Reinvestment Act (CRA), the National Community Reinvestment Coalition’s (NCRC) President and CEO, John Taylor, made the following statement:

“It is very disappointing that the Q&A does not address a critical issue: the definition of a CRA assessment area. An assessment area is currently a geographical area containing bank branches. But modern banking is conducted through a variety of conduits, beyond traditional brick and mortar branches. Regulators should have presented processes for the consideration and evaluation of performance through all of these conduits. The current system is inaccurate, and most importantly, it does not adequately protect the interests and needs of working Americans. While the new Q&A addresses community development activities, it overlooks this critical geographical assessment area issue. The regulatory agencies’ timid approach on this issue will result in fewer bank loans, investments, and services in low- and moderate-income communities. As is, CRA exams will continue not to evaluate a large number of loans for non-traditional and large banks that lend through brokers, correspondents, and other non-branch means.”

“The agencies are proceeding backwards and are not giving themselves the tools with which to measure their proposed changes. This is not an effective method for improving the effectiveness of the nation’s reinvestment requirement to ensure that low- and moderate-income neighborhoods have a fair chance to grow and rebuild. The agencies will continue to erode CRA’s future effectiveness if they fail to address how exams will capture home and small business lending made beyond bank branch networks.”

In the changes in the Q&A document, the agencies addressed the inadequacies in assessment areas regarding community development lending and investments such as equity investments in small businesses or Low Income Housing Tax Credits. Previously, the Interagency Q&A document stated that “considering its performance context,” an institution can received favorable consideration for community development activities outside of its assessment area provided that it has “adequately addressed community development needs of its assessment areas.” In the revision released last week, the new language states that an institution can receive favorable consideration for community development outside of assessment areas “as long as the institution has been responsive to community development needs and opportunities in its assessment areas.”

“The agencies are thinking about this backwards. Instead of bending over backwards to permit community development outside of assessment areas, the major emphasis on reform should be expanding assessment areas to include those areas in which a bank makes significant amounts of retail loans but does not contain branches. If the agencies undertook this reform, then the number of assessment areas would expand and banks would not feel as great a need to expand beyond their assessment areas to find community development lending and investment opportunities.”

“The agencies are also missing important opportunities to monitor the effects of their changes. In order to determine whether community development lending and investments are reaching geographical areas in greatest need, the agencies need to collect and analyze data on the counties in which community development loans and investments occur. Despite NCRC calling for this data for several years, the agencies have not adopted this data collection proposal.”

“The agencies held hearings in 2010 and invited hundreds of community organizations and stakeholders to submit ideas for CRA reform. It is deeply disappointing that, several years later, regulators have fallen far short of what needs to be done with this Q&A and the CRA regulation.”

About NCRC

The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America’s working families. To find out more, visit http://ncrcdev.local

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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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