Next City: Big bank invites cities to compete for $500 million in community development funds

Next City, September 14, 2018: Big bank invites cities to compete for $500 million in community development funds

JPMorgan Chase, currently the nation’s largest bank, recently invited local coalitions in cities across the United States to submit proposals for a slice of $500 million from the bank, intended to create affordable housing, to start and grow minority- or women-owned businesses, or to increase the number of livable-wage jobs that aren’t immediately threatened by technological advancement. In turn, the bank anticipates its dollars will help local coalitions directly leverage another $1 billion in funding from other sources.

The announcement comes at a time when cities are anticipating a flood of new investment dollars into low-income communities, thanks to new Opportunity Zones tax incentives. But it also comes at a time when federal regulators have initiated a reform process for the Community Reinvestment Act, a 1977 law that requires banks to serve low-income communities. That reform process, advocates say, could result in a major loss of lending and community development dollars for low-income communities.

While advocates agree much reform is needed to strengthen the Community Reinvestment Act, the current reform process threatens instead to weaken it and thereby reduce the overall amount of capital available for community development needs. Banks reported to federal regulators that they made $96 billion in community development loans in 2016, up from $87 billion in 2015 and $74 billion in 2014, according to the Federal Financial Institutions Examination Council. Those figures, representing primarily investments in affordable housing, economic revitalization and other projects, do not include home lending or small business lending reported to federal regulators for Community Reinvestment Act purposes.

In addition to reducing incentives for community development lending, changes proposed by current federal regulators to weaken the Community Reinvestment Act could result in the loss of up to $105 billion a year in home lending and small business lending to low- and moderate-income areas, according to a forecast by the National Community Reinvestment Coalition, a national network and advocacy group representing fair housing advocates and community development organizations across the country.

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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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