MinnPost, March 2, 2020: Proposed changes would slow progress toward equitable lending in minority communities
Nasibu Sareva, executive director of the African Development Center at the Metropolitan Consortium of Community Developers:
We take our charge to meet community needs seriously and prioritize serving disadvantaged communities. The administration’s push to relax the rules will significantly reduce the incentive for banks to meet the credit needs of low-income communities while maintaining a “good” CRA rating. It’s unfair to our community development partners that these proposed changes would enable institutions less invested in meeting the needs of our communities to receive a positive rating.
These changes have real implications. The National Community Reinvestment Coalition found that weakening CRA would result in a loss of 10-20% in the volume of loans made in low- and moderate-income census tracts. In Minnesota, that would mean up to a $1.9 billion decrease in lending to small businesses and home purchases over five years.
Financial institutions receive subsidized funding and in times of economic crisis are bailed out using tax dollars. The CRA was the government’s attempt to form a social contract of sorts between banks and the public to ensure all have equitable access to credit and financial services. We cannot ease burdens on banks on the backs of underserved communities.
