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NCRC applauds Biden’s Executive Order Targeting Bank Mergers

Today, President Biden signed an Executive Order promoting American competition and tackling excessive corporate consolidation across multiple sectors in the U.S. economy. The order called on the Department of Justice (DOJ) and the nation’s bank regulators to update their merger guidelines and provide tougher scrutiny of bank combinations. It also called on the Consumer Financial Protection Bureau (CFPB) to issue new rules that give consumers full control of their financial data, making it easier to switch banks. 

Jesse Van Tol, CEO of the National Community Reinvestment Coalition (NCRC), made the following statement:

“President Biden’s directive today could help stem the tide of bank consolidations around the country. We have long urged the nation’s regulators to strengthen their anti-competitive review of these transactions. They should also better scrutinize if there are public benefits of these combinations as the law requires, and that there are clear and enforceable commitments for the communities, small businesses and consumers who are so often on the losing end of bank combinations.

“Our research has continuously shown that the number of commercial banks is on the decline. In 2012, there were 7,250 banking institutions in the U.S. and by 2018 that number had fallen to just 5,551. The number of small banks declined from 5,018 to 3,443 during this timeframe while the number of banks with more than $100 billion in assets increased from 19 to 30  Meanwhile, the number of banking deserts continued to grow.

“While mobile and internet banking are often cited as the key drivers of bank branch closures, the rapid pace of bank mergers since the Great Recession are more likely the driving factor in many closures. Between 2012 and 2018, the number of bank branches operating in the U.S. plummeted from 93,391 to 84,519, a decline of almost 10%. Recent mergers such as Truist and others have resulted in even more closures. As of June 2020 there were just 82,086 full service banking locations in the U.S., according to FDIC data.

“The impact of these closures is severe, especially on rural and lower-income urban communities where few branches exist at all. These communities are left vulnerable to payday lenders, online installment lending and contract buyer scams. These closures also make it harder for local businesses to secure loans to start or expand a business.

“We applaud President Biden for taking this long-needed action, and we look now to the Fed, DOJ and CFPB to see how they translate this executive order into actionable change.”

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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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