In response to bank lobbyists’ lawsuit to block vital regulations designed to foster financial opportunity in neglected communities, National Community Reinvestment Coalition President and CEO Jesse Van Tol released the following statement:
The banking industry is showing its true colors. Out of one side of their mouth they say higher capital requirements will hurt people of color and low-income people, but then out of the other they attack the nation’s preeminent law requiring them to lend to those same people. Nobody should believe them when they say they care about lending to working-class people and people of color. On top of this, they’re fighting to dismantle the CFPB, and they’ve even asked the courts to let them out of such mild irritations as ‘tell us who you do and don’t lend money to for small business activity.’
This is a short-sighted move by a relatively small but well-resourced group of banks inside the trades who want a do-over even though regulators made compromises that reflect portions of the feedback they got from both bankers and activists, and which left neither group entirely happy.
Moral ugliness aside, it’s also just a bad business decision: The new rules provide clarity around banking technologies that didn’t exist the last time CRA was updated and lay out numerous new investment opportunities that banks can make money from while earning CRA credit. If I were a dues-paying member of these trade groups, I might ask for my money back.
I am confident justice will prevail in this instance. Clearly the drafters of CRA intended for it to cover more than a small portion of a bank’s activity. Right up front the law says banks have an “affirmative obligation to help meet the credit needs of the local communities in which they are chartered.” Clearly they are chartered to do business beyond where their branches are physically located, unless they want to turn back the clock to before interstate banking rules took effect and give up their regional and national franchises.
By fighting to stop or delay the rule, banks invite a critical eye to their track record of meeting their CRA obligations.