Forecast: Banking rule changes could reduce lending in poor neighborhoods by $105 billion

WASHINGTON, D.C. – A new forecast projects that changes to the Community Reinvestment Act could reduce lending in lower-income communities up to $105 billion dollars in the next five years. The forecast by researchers at the National Community Reinvestment Coalition comes as the Trump administration considers ideas pushed by banks to change enforcement of the Community Reinvestment Act.

The researchers calculated likely losses at the national, state, and Congressional District levels in both small business and mortgage lending in every census tract in the nation. For instance, lending in New York would decline by $5.6 billion and in Alabama it would decline by $982.5 million.

The forecast does not include declines in community development lending, which likely would also decline if the law is weakened.

“Local leaders need to understand the impact this law has on their communities, and what changes could mean to them,” said Jesse Van Tol, CEO of the National Community Reinvestment Coalition. “Regulators and policy makers need to understand that rule changes to make life a little easier and a little more profitable for banks could cost their communities up to $105 billion dollars in just the next five years. This could impose an enormous barrier to wealth building opportunities for millions of Americans in neighborhoods across the nation.”

The Community Reinvestment Act is a landmark civil rights law passed in 1977 to end discrimination that was once common in America’s banking and housing markets. To meet their CRA requirements, banks have made an additional $2 trillion in small business and community development loans in working-class neighborhoods since 1996.

The forecasts for every census tract can be viewed here.

Print Friendly, PDF & Email

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

Complete the form to download the full report: