NCRC Makes Recommendations to Improve Performance Context Analysis in Community Reinvestment Act Exams

Washington, DC – Today, the National Community Reinvestment Coalition (NCRC) released a white paper describing the importance of Community Reinvestment Act (CRA) exam performance context analysis, reviewing current implementation of the analysis, and prescribing improvements. The paper, “CRA Performance Context: Why it is Importance for Community Development and How to Improve it,” shows that current performance context analyses do an unsatisfactory job determining the housing and economic conditions of a community, and often do not adequately solicit the community’s residents about their financial services needs. This can lead to inaccurate measurements of how well banks are meeting a community’s credit needs, and contribute to CRA exam grade inflation.

“In recent years, 98% of banks have passed their CRA exams,” said NCRC President and CEO John Taylor. “I wish we lived in a world in which that many banks were doing a satisfactory job meeting the needs of their communities, but in too many neighborhoods across America that is simply not the reality. This grade inflation is one indication that our regulatory system ‘Needs-to-Improve’ the performance context analysis, and interact more with community residents to gather their input on local credit needs.”

The paper offers suggestions for performance context measures and recommendations for banking regulators, community groups, and bankers to improve the analysis.

The white paper can be read here. An infographic on CRA grade inflation can be found here.

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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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