Roll Call: Rise of Fintech Weakens Law to Prevent Lending Discrimination

Roll Call, October 15, 2019: Rise Of Fintech Weakens Law To Prevent Lending Discrimination

“I think every bank is willing to make a profitable loan or take a person’s deposits from no matter where it is,” says Jesse Van Tol, CEO of the National Community Reinvestment Coalition, a finance-focused association of community groups. “The question is: What are they willing to invest back into those places?”

Van Tol says gutting the CRA of its geographic focus would run counter to its fundamental purpose of ensuring that banks are responsive to the communities they draw deposits from.

“The entire point of the CRA is to keep the banks accountable to community needs,” he says. “It is the goal of the CRA to ensure that banks … develop some local knowledge and expertise about what’s going on in that local community.”

For now, it’s unlikely the federal government will address the growing gap in CRA coverage.

By the National Community Reinvestment Coalition’s count, only 30% of mortgage lending falls under CRA obligations, and as more types of lending expand online, Van Tol worries that fewer small business loans will go to low- and moderate-income entrepreneurs.

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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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