Missing Records Include Data and Analysis Cited in OCC and FDIC’s Plan, Which, if Adopted, Would Reduce Investment in Low- and Moderate-Income Communities
Today, the National Community Reinvestment Coalition (NCRC), represented by Democracy Forward, sued the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) for failing to locate and produce records and analysis that the Trump administration relied on for its proposed revisions to the Community Reinvestment Act (CRA) regulations. As a result, OCC and FDIC continue to shield from public scrutiny the basis for the administration’s proposal to weaken the anti-redlining protections of the CRA.
OCC and FDIC’s January 2020 publication of the potential CRA changes failed to include the data and analysis that the agencies cited as the basis for the proposed rule. NCRC submitted a Freedom of Information Act (FOIA) request seeking that data and analysis, including records related to the formula the agencies proposed, which would allow banks to fail their CRA exams in nearly half of the geographical areas in which they are examined but still receive full credit under the law; information about benchmarks used for the CRA performance measures; and records containing analysis of or information about the proposal to define “affordable housing” to include housing for middle-income households.
“The public has a right to see the information the Trump administration relied on to justify its proposal to dramatically change the Community Reinvestment Act,” said Nitin Shah, Democracy Forward Senior Counsel. “To weaken the CRA’s anti-redlining protections without giving the public the opportunity to review the facts and analysis underlying their proposal raises serious questions about what the administration is trying to hide.”
“We don’t know why the agencies kept their data out of the proposal, but we do know it makes absolutely no sense to ask the public to comment on a plan that hides the data it was based on,” said Jesse Van Tol, CEO of NCRC. “The public should be able to review and comment on the data before the agencies move ahead with any rule changes.
“Hiding the data was bad before the coronavirus pandemic, and it is completely negligent now. We need to know how the proposed changes will impact the ability of communities to rebuild once the pandemic is over. Millions of people have lost their jobs and will need to work with banks in their communities to recover. Will the new rules encourage that and lead to more lending and investments that benefit low- and moderate-income people? Or will they make it easier for banks to funnel money into big projects that do little for people most in need of help? We can not fully analyze the proposal and what effects it will have on low- and moderate-income communities without this data.”
Enacted in 1977, the CRA is essential to combat redlining and encourage banks to meet the credit needs of communities where they do business, particularly low- and moderate-income communities. It requires banks to lend and invest locally, and has long provided crucial protections for historically disenfranchised communities across America. OCC and FDIC’s proposed rule change — the culmination of Trump administration efforts to weaken the CRA — would fundamentally undermine the central purposes of the CRA: to facilitate retail lending, economic development, affordable housing, and support for small business in low- and moderate-income communities.
OCC and FDIC have failed to sufficiently fulfill their obligations to identify and produce relevant records as required by the Freedom of Information Act. Our lawsuit compels them to abide by the law.
The suit was filed on April 8, 2020, in the United States District Court for the District of Columbia.
Democracy Forward is a nonprofit legal organization that scrutinizes Executive Branch activity across policy areas, represents clients in litigation to challenge unlawful actions, and educates the public when the White House or federal agencies break the law.
The National Community Reinvestment Coalition and its grassroots member organizations create opportunities for people to build wealth. We work with community leaders, policymakers and financial institutions to champion fairness and end discrimination in lending, housing and business.