NCRC Urges Senate Committee to Pressure OCC, FDIC to Drop Proposed Changes to CRA

On Tuesday, May 12, 2020, the Senate Committee on Banking, Housing and Urban Affairs is scheduled to conduct a virtual hearing on the oversight of financial regulators, with testimony from Office of the Comptroller of Currency’s (OCC) Comptroller Joseph Otting and Federal Deposit Insurance Corporation Chairman Jelena McWilliams.

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

“The Trump Administration says it wants to restart the economy. But its agencies are pushing hard for changes to bank rules that will make recovery weaker, slower and more painful for lower-income communities and communities of color. Why are these agencies pushing ahead with changes to the Community Reinvestment Act that would result in [bloated/inflated] CRA ratings for banks but less of the kind of lending, investing and services needed in communities hit hardest by COVID-19?

“Almost nobody thinks the proposed rules are a good idea. COVID-19 changed everything. Regulators need to start over. Any changes to CRA need to help lower-income communities and communities of color recover from COVID-19, and not make things worse for them.

“CRA will be a vital tool for financial institutions and low- and moderate-income communities hit the hardest by COVID-19, but the changes proposed by the OCC and the FDIC would change how banks are regulated and result in less resources for those communities.

“Look at the things that homeowners and small businesses will need the most in any economic recovery; affordable loan modifications after the forbearances under the CARES Act, waived fees, smaller loans to meet payroll. These are all things the proposal takes banks’ focus away from in favor of other bank activities that will inflate their CRA ratings.

“The Federal Reserve was never on board with these proposals. All three of the banking regulators should start over, go back to the drawing board and create a proposal that will truly modernize CRA so banks do a better job serving the communities where they take deposits.”

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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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