The American Prospect: The revolving door and the assault on community reinvestment

The American Prospect, November 21, 2018: The revolving door and the assault on comment reinvestment 

Congress approved the Community Reinvestment Act in 1977 to combat redlining and other forms of discriminatory lending. The CRA calls on banks to serve their entire communities.

A bad CRA record could prevent a bank from buying or merging with another bank. Bankers wish to purchase smaller banks to grow. Smaller bankers seek to sell to cash out for a profit. As such, the CRA has become foundational in the nation’s effort to promote fair lending.

That quiet enforcement mechanism—a potential stop sign for growth and profit—became a powerful tool to promote a robust effort by American banks to build a laudable CRA record.

The National Community Reinvestment Coalition says the CRA has led to trillions of dollars in credit to communities that otherwise might be ignored by the banking sector. Many banks employ CRA managers, both to facilitate this credit and to ensure that their record of community services is well documented for regulators that decide on whether to approve a merger.

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