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Reuters: Federal reserve may review rules on lending to the poor

Reuters, March 26, 2018: Federal reserve may review rules on lending to the poor

The Federal Reserve may change decades-old rules that require banks to lend to low-income borrowers as part of a broader effort to revise a range of banking regulations, the U.S. central bank’s head of regulation and supervision said on Monday.

Changes to the Community Reinvestment Act (CRA) may be necessary due to the rise of online lenders, known as “fintech” firms, as well as industry consolidation, that has reshaped the community lending landscape, Randal Quarles, the Fed vice chair for supervision, said in remarks prepared for delivery to a conference in Atlanta.

The Office of the Comptroller of the Currency, the other top U.S. banking regulator, has said it plans to issue a consultation on revising the CRA in coming weeks.

 

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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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