Part Two of a four-part series examining noteworthy trends in the comment letters sent to regulators as they finalize Community Reinvestment Act reform.
Nearly 5,000 organizations and individuals submitted public comment letters on the Community Reinvestment Act (CRA) Notice of Proposed Rulemaking (NPR) before the deadline on August 5, 2022. Only 13% of these comments have been made public, however.
Despite this limited disclosure, we found notable trends in the comments that have been published.
In Part One of this series on commenter themes, we looked at race and small business ideas. Here in Part Two, NCRC will review comments that mentioned health care and climate resiliency.
Climate resiliency and healthcare are issues that many don’t think about when discussing CRA. But the comments submitted to this rulemaking have made it clear that this is a topic that CRA regulators need to focus on in order to promote holistic neighborhood reinvestment.
CRA helps to address social determinants of health through the building of grocery stores, funding local health programs, and investing in neighborhoods thereby creating healthier communities. Letters from groups such as one from the Healthcare Anchor Network highlighted those points. They urged CRA regulators to improve data collection for the impact review section of the community development finance test, which assesses how well a bank meets community development financing needs. This applies to large banks as well as intermediate banks that choose to opt into this test. In their letter, they also noted that data on impacts such as the number of beds in health facilities or how many housing units had lead paint abatement will better capture the importance of funding health initiatives. Such action would also better motivate banks to invest in these initiatives since their outcomes will be more accurately reflected on CRA exams.
NCRC shared recommendations similar to the Healthcare Anchor Network and others regarding data collection. We also noted that other data fields should record services to underserved populations such as people with disabilities, older adults and first-time homebuyers. Additional data fields could further capture the relationship between climate remediation and health. These include green space and tree canopy neighborhood projects that reduce outdoor heat and stress on older adults and others vulnerable to excessive heat.
The National Disability Institute (NDI) noted in their letter how people with disabilities face significant barriers to financial stability. When compared to working adults who do not have a disability, they have higher medical debt, lower levels of pay and less stable incomes. In their comment NDI also detailed nine important elements CRA regulators could incorporate. A few of the standout recommendations included:
- Regulators publishing examples of CRA qualifying activities for banks that respond to the financial needs of LMI individuals with disabilities with products and services that are accessible and affordable, and investment and lending that advances inclusive community development.
- Requiring outreach to community groups in the disability community to be part of identification of community need and performance context analysis.
- Offering training and technical assistance with disability subject matter experts to increase awareness and knowledge about LMI individuals with disabilities, their inclusion in LMI neighborhoods, potential partnership opportunities with nonprofits focused on this population and examples of CRA qualifying activities and documentation needed.
- Encouraging expert and consumer input directly from the financial and disability community to produce available and new data and analysis to increase bank support across retail products and services and community development activities of the LMI disability population in and outside their assessment areas.
The world is feeling the impacts of climate change from rising sea levels and more frequent and intense extreme weather, such as deadly hurricanes, wildfires, droughts and heat waves. Climate change disproportionately affects the ones least responsible for its harms, primarily low- and moderate-income (LMI) communities and racial and ethnic minority communities.
Recently, Rice University conducted a study on how natural disasters widen the racial wealth gap. It found that majority White counties saw their wealth increase after natural disasters while majority minority counties saw their wealth decrease. The study noted that White communities saw higher levels of reinvestment in their communities after natural disasters in comparison to their minority counterparts. The study found that White families who lived in counties with only $100,000 in natural disasters damage between 1999 and 2013 gained an average of approximately $26,000 in wealth and those who lived in counties with at least $10 billion in damage during the same time period gained nearly $126,000. However, it was found that Black families who lived in counties with just $100,000 in damage gained only $19,000 in wealth on average and those living in counties with at least $10 billion in damage lost roughly $27,000.
Latino and Hispanic communities saw similar gains and losses. The study found that Latinos in counties with $100,000 in damage fared better than most with $72,000 gained on average. However, in areas with at least $10 billion in damage, they lost an estimated $29,000. Asian Americans gained $21,000 on average and lost $10,000, respectively. Knowing those statistics, it makes sense that CRA would be seen by commenters as a way to both reduce the impacts of climate change and reduce the racial wealth gap that is clearly increased by natural disasters.
The Sierra Club argued in their letter that federal regulators should identify the most climate-vulnerable communities, and specifically use race as a metric to improve access to credit and services for those who need it most. In addition, bank investments that contribute to climate risk must be penalized through lower CRA ratings. They also noted that a list of climate-related eligible activities under CRA should be expanded. Specifically, they noted that the expanded list should include:
- workforce training and job creation through local solar, wind and energy-efficiency projects;
- affordable housing that facilitates benefits for residents such as savings on utility bills;
- community solar and microgrids;
- operational support for environmental and climate justice organizations; and,
- electrification and water efficiency measures for residential homes, including multifamily properties.
NCRC and other commenters supported an expansion of this list as well. We argued that an expansion would benefit LMI individuals and communities in a holistic manner. Along with others, we also maintained that renewable energy projects can be distinct from energy-efficiency improvements. Both types of endeavors should be recognized by the disaster preparedness and climate resiliency definitions in CRA regulation. In order to ensure a direct benefit to targeted geographies, a bank should prepare documentation including verifiable data to present to examiners. A joint letter from The Greenlining Institute, AFR, and Public Citizen suggested similar proposals as NCRC and Sierra Club, but encouraged banks to increase community engagement and relationship building with climate and environmental justice organizations, including through the use of Community Benefits Agreements (CBAs).
Joseph Reed is the Senior Policy Advocate at NCRC.