Next City: Illinois Will Now Grade Credit Unions and Mortgage Companies on Their Commitment to Fair Lending

Next City, May 11, 2021, Illinois Will Now Grade Credit Unions and Mortgage Companies on Their Commitment to Fair Lending

The Community Reinvestment Act was born in Chicago.

“The federal CRA was inspired by a response to redlining and the systematic refusal of financial services to Black residents [in Chicago],” says Illinois State Senator Jacqueline Collins, who recently spearheaded the passage of legislation to strengthen anti-redlining rules in her state. Since 2003 she’s represented the district that includes the predominantly Black neighborhoods on the South Side of Chicago where she grew up and still lives today.

Only a few other states have their own CRA laws. Generally, state CRA laws and regulations hew closely to federal reinvestment policies and standards, but provide an extra layer of oversight. New York has one that applies to state-chartered banks. Connecticut’s CRA law extends to state-chartered credit unions. Massachusetts is the only other state with a CRA law that applies to state-chartered banks and credit unions as well as mortgage companies licensed to operate in the state.

Meanwhile, Federal Reserve Chairperson Jerome Powell recently voiced his support for expanding the federal CRA to all institutions that make consumer loans. “Like activities should have like regulation,” Powell said last week to the annual conference of the National Community Reinvestment Coalition, a nationwide network of community development and fair housing groups. It would take legislative action from Congress to do so.

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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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