CRA will be essential for COVID-19 economic recovery in the communities hardest hit by the pandemic.
The Community Reinvestment Act was passed in 1977 to end discrimination known as redlining.
It required banks to meet the credit needs of the communities where they do business. Discrimination in lending is still a problem.
Three federal banking agencies proposed a historic overhaul of CRA rules in early May 2022. We are rapidly devouring the lengthy proposal and will provide updates on its details on a rolling basis. This is an exciting opportunity to ensure that regulators respond appropriately to the urgent need to make CRA exams more rigorous, expand data collection and improve communication around merger reviews. We are also gearing up our comment submission campaign, so stay tuned for our rule analysis and sample comment letters!
Help us spread the word in your community.
Use the tools on this page to reach your friends and local leaders.
See how much CRA lending has gone into your community.
Source: Home Mortgage Disclosure Act Data from the FFIEC (pre-2018) and the CFPB (2018-2020). Originations only to borrowers that are low-or-moderate income or who are in a low-or-moderate income census tract. Business loans are from the FFIEC. Loans to businesses with less than $1 million in annual revenue or which are in LMI census tracts are included. These two figures are independent of each other and will have some loans that are counted in both figures.
Stay tuned for our upcoming sample comment letters when the new Notice for Proposed Rulemaking is published!
Spread the word about CRA. Here are some things you can use.
#TreasureCRA
#itsOURmoney
#JustEconomy
Let’s remind federal regulators any CRA rule must modernize and strengthen CRA so all communities have access to lending and investments. @USOCC @FDIC @FederalReserve #TreasureCRA https://bit.ly/3K6IhkT
A modernized an d strengthened CRA must apply across the financial sector. Nonbanks should be held to the same requirement to provide lending and investment in LMI communities and communities of color as banks. #TreasureCRA @USOCC @FDIC @FederalReserve https://bit.ly/3v2XwVE
To counter the effects of discrimination, Congress identified banks’ affirmative duty to meet the credit needs of their entire communities. A modernized and strengthened CRA must add a robust consideration of race. #TreasureCRA https://bit.ly/3uHsMcC
What We Want:
Geography must remain the focus of CRA exams for all banks. We want banks to be graded based on every geography where they lend or receive a significant percentage of their deposits. Lending isn’t tied to bank branches the way it used to be. But branches are still essential for low- and moderate- income people. Geography still matters. Neighborhoods still matter.
What We Can’t Let Happen:
We can’t eliminate geographic assessment areas. We can’t allow banks to cherry-pick where they lend – and where they don’t lend at all. We can’t allow banks to ignore the credit needs of distressed and vulnerable communities. We can’t allow a reboot of redlining.
What We Want:
We want new language explicitly stating the law’s obligation to fairly serve all races and ethnicities. Banks that engage in large-scale illegal and harmful activities should fail their CRA exams.
What We Can’t Let Happen:
In 2017, the Office of the Comptroller of the Currency (OCC) watered down the penalties for discrimination. We can’t allow regulators to allow banks to pass CRA exams if they discriminate.
What We Want:
We want the Community Reinvestment Act applied to all lenders, the same way it’s applied to traditional banks. The financial landscape has changed. Mortgage companies, credit unions, fintechs and other “nonbank” lenders now make the majority of the home loans in America.
What We Can’t Let Happen:
We can’t allow a majority of mortgage lenders to avoid CRA requirements. Banks and the Treasury Department have acknowledged that the financial landscape has changed, and that CRA should be updated to reflect the current marketplace and increase safe reinvestment in our communities.
What We Want:
We want a clearly-defined grading system that emphasizes lending, branches, fair lending performance, and responsible loan products for working class families. We want each of these important aspects to get their due weight in analyzing a bank’s CRA performance. We do not support one ratio that lumps all of a bank’s activity together.
What We Can’t Let Happen:
We cannot allow a rating system that makes it easy for banks to pick the lowest hanging fruit and ignore critical community needs.
What We Want:
We need regulators unafraid to stand up to financial institutions. If a bank fails its CRA exam, or wishes to acquire a bank with a better CRA grade, agencies should recognize and encourage community benefit agreements. We want to motivate a race to the top across our financial industry.
What We Can’t Let Happen:
This spring, the OCC weakened its CRA enforcement by allowing banks with failed CRA ratings to merge, acquire, and grow their business. We cannot allow regulators to adopt this policy. The “wink and nod” CRA exam has gone on long enough.
Read the rest of our principles for CRA reform.
WHEREAS, the Community Reinvestment Act (CRA) was enacted on October 12, 1977 to end the practice of “redlining” by financial institutions where they would draw a red line on a map around the neighborhoods they did not want to offer financial services; before the enactment of the CRA, redlining made it near impossible for low- and moderate-income Americans, racial and ethnic minorities, and their neighborhoods to access credit services, such as mortgages and business loans, regardless of their qualifications or creditworthiness; and
WHEREAS, CRA was a landmark civil rights law passed in 1977 to end discrimination that was once common in America’s banking and housing markets; and
WHEREAS, discrimination in lending is still a problem; and
WHEREAS, the CRA states that “regulated financial institutions have continuing and affirmative obligations to help meet the credit needs of the local communities in which they are chartered”; and
WHEREAS, the CRA establishes a regulatory regime for monitoring the level of lending, investments, and services in low- and moderate-income neighborhoods traditionally underserved by lending institutions; examiners from three federal agencies assess and “grade” a lending institution’s activities in low- and moderate-income neighborhoods; and
WHEREAS, the federal agencies conducting CRA examinations are: the Office of the Comptroller of the Currency (OCC), which examines nationally chartered banks and the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board – both of whom examine state-chartered banks; and
WHEREAS, if a regulatory agency finds a financial institution not serving these neighborhoods, it can delay or deny that institution’s request to merge with another lender or to open a branch or expand any of its other services; the financial institution regulatory agency can also approve the merger application subject to specific improvements in a bank’s lending or investment record in low- and moderate-income neighborhoods; and
WHEREAS, a financial institution’s CRA grade can be downgraded if a federal agency uncovers evidence of illegal, abusive or discriminatory lending on their fair lending exams that occur at about the same time as CRA exams; and
WHEREAS, since 1996, according to analysis of bank lending data by the National Community Reinvestment Coalition (NCRC), CRA-covered banks issued almost 29 million small business loans in low- and moderate-income tracts, totaling $1.156 trillion, and $1.179 trillion in community development loans that support affordable housing and economic development projects benefiting low- and moderate-income communities; and
WHEREAS, a 2016 review of the CRA examinations of intermediate small banks(ISBs)/mid-sized banks (banks with asset sizes today between $313 million and $1.252 billion) found that ISBs produced over $9.3 billion of community development (CD) loans and grants; and
WHEREAS, studies have found that CRA-covered home lending is safer and sounder than non-CRA covered lending; when a larger share of lending is issued by CRA-covered banks than by independent mortgage companies, a neighborhood experiences lower delinquency rates and less risky lending; and
WHEREAS, despite the tremendous benefits of CRA to communities, the full potential of CRA has not been realized because it has not been updated to take into account changes in the banking industry and the economy; independent mortgage companies not covered by CRA now make more than 50 percent of the home mortgage loans in America and financial technology companies (“Fintech”) not covered by CRA operating via the internet are rapidly increasing their lending; and
WHEREAS, notwithstanding the need to modernize CRA, we are concerned about ideas from some federal regulators that would substantially weaken the law; and
WHEREAS, geographic assessment areas must remain the focus of CRA exams for all banks; banks should continue to be graded based on every geography where they lend or receive a significant percentage of their deposits; banks cannot be allowed to cherry-pick where they lend – and where they don’t lend at all or to ignore the credit needs of distressed and vulnerable communities; and
WHEREAS, regulators review of a bank’s CRA commitment should not be consumed by an approach that is primarily driven by dollar amount. The OCC and FDIC propose a presumptive rating which would mainly consist of the dollar amount of a bank’s total CRA activities divided by the bank’s deposits. CRA was designed to encourage the financial system to meet the credit and capital needs of people with low and moderate incomes and small businesses who frequently have a need for relatively smaller sized loans. Moving to a dollar volume approach would encourage larger deals at the expense of underserved borrowers the law was designed to protect; and
WHEREAS, the OCC’s and FDIC’s proposal of January 2020 would also move CRA away from its focus on low- and moderate-income families and communities and count the financing of sports stadiums, middle-income rental housing, and financial education for middle- and upper-income consumers; and
WHEREAS, CRA should explicitly state the law’s obligation to fairly serve all races and ethnicities; banks that engage in large-scale illegal and harmful activities should fail their CRA exams.
WHEREAS, allowing banks to fail in half of the markets they take deposits from and still pass their CRA performance evaluations will allow banks to pick and choose where they proactively support the credit and capital needs of people with low- and moderate-incomes, and ignore them in other markets where they currently have an obligation; and
WHEREAS, the new proposed scoring system will radically devalue the importance of maintaining branches in neighborhoods with low- and moderate-incomes, despite strong evidence that branches are still heavily used by households with lower incomes; and
WHEREAS, proposal to give a multiplier of two to many ways that banks already finance community development for CRA credit, which is likely to lead to a reduction in actual community development financing; and
WHEREAS, basing new assessment areas off of physical addresses of depositors is problematic since this information is not currently collected, and if collected would likely not be shared with the public, leaving cities to guess whether a bank has an obligation to serve their community; and
THEREFORE BE IT RESOLVED, that the (organization’s name), will support efforts to modernize CRA, but not relax or undermine the law’s goal and intent; and
BE IT FURTHER RESOLVED, that the (organization’s name), will oppose regulators efforts to raise bank thresholds and exempt more banks, such as ISBs/mid-sized banks, from examination of their community development lending and investments; and
BE IT FURTHER RESOLVED, that the (organization’s name), will support modernizing CRA to apply it to non-bank institutions including mortgage companies, financial technology companies, and credit unions; and
BE IT FURTHER RESOLVED, that the (organization’s name), will oppose regulators efforts to water down the penalties under CRA for discrimination; and
BE IT FURTHER RESOLVED, that the (organization’s name), will support a CRA with a clearly-defined grading system that emphasizes lending, bank branches, fair lending performance, and responsible loan products for working class families; and
BE IT FINALLY RESOLVED, that the (organization’s name), will support efforts to hold a bank accountable if it fails its CRA exam, or wishes to acquire a bank with a better CRA grade, and urge agencies to recognize and encourage community benefit agreements and efforts that motivate banks to make more loans, investments, and services available to traditionally underserved communities.
Respectfully submitted on _____,
We’re counting on these people and organizations.
Importance of local press
While many local news outlets continue to struggle, some are holding on, continue to report on local issues and have attentive audiences focused on them. These local media providers can be an important channel to reach local audiences and leaders and an invaluable resource for community organizations trying to build momentum for a national law that seems at times more inside-the-beltway than community-focused. And for all the political games swirling around CRA reform right now – the people who will be most affected will be you and your neighbors. Let’s work together to get the word out – we will not let the CRA be gutted – and together we can start a new movement to further a just economy for all.
There are several ways to get your point of view into local media:
How to reach out:
Sample Pitch:
Bank regulators in Washington have published new rules to change the Community Reinvestment Act, a law enacted in 1977 to get rid of discrimination that was once common in mortgage and small business lending by banks. Redlining was once widespread across America, and it happened here too. It kept capital out of neighborhoods where minorities and immigrants lived. CRA was passed to put a stop to that.
But discrimination in lending is still a problem. This law has a direct impact on [city / our community]. Our local banks make mortgage and small business loans, as well as grants to local nonprofits, in order to comply with the law. The proposed changes ould have a big impact here, especially on low- and moderate-income people. Would you be interested in writing about this issue and why it matters to our community? If so, I’d love to share more info with you.
New Orleans Needs a Stronger, Not a Weaker Community Reinvestment Act
OpEd’s:
OpEd’s are another way to get local press coverage. Here you write an opinion piece and then shop it around to local papers and magazines. Most outlets have their own requirements, so be sure to check with them before you write and pitch your piece.
Suggested Content:
We suggest you start your OpEd off with local impacts. What has CRA done for your community in the past? How will the proposed changes halt these investments? And then you can use some of our talking points below to further bring home the point that these proposed changes are disastrous for our underserved communities.
All parties invested in the Community Reinvestment Act (CRA) – bankers, regulators, community leaders and watchdog groups – have agreed for some time that CRA was in need of modernization to reflect changes in how people access banking services today opposed to in 1977 when the act was first enacted. However, there is no doubt that the proposed changes from the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) would greatly diminish the effectiveness of the law and does a terrible job of addressing our mutual concerns. Instead, the agencies came up with ways for banks to do less for lower-income neighborhoods and borrowers, and a host of complex and confusing options.
When 98% of banks already pass their CRA exams, do we really need to make it easier for them? This is exactly what the rules proposed in December would do. It would even make it easier for banks to cherry-pick where they do business by reducing the importance of assessment areas. Banks would be able to invest outside of their assessment areas before they have met the needs within their assessment areas and still receive full credit on their CRA exams. They would also be able to completely ignore half of their assessment areas, because they only need to pass 50% of their CRA exams to receive an outstanding rating.
But that isn’t even the worst of it. With the one ratio metric, an overly simplistic measure that divides the dollar value of CRA activities by the bank’s total deposits, banks would likely favor larger loans and investments. Add in the fact that large infrastructure projects like bridges and sports stadiums in Opportunity Zones are worthy of CRA credit, and it is clear that these proposed changes do nothing short but encourage banks to reduce their lending to lower-income borrowers in lower-income neighborhoods, neighborhood-based nonprofit organizations, small business and home mortgages. Because what would you do if you had the choice between a high-dollar, high-return project or a bunch of small, low-return investments? (note – if you have a large infrastructure project planned or in the works in your community, it would be good to highlight it here and show how it could skew community investments)
Banks are literally being told by the federal regulators to turn their backs on potentially millions of people whose deposits are the foundation of the banking business. A clear descent against the intent of the law.
And if those changes weren’t bad enough, the banking regulators took it even further. The definition of affordable housing would be expanded in a manner that will not ensure bank activities are actually going to LMI people. The small business revenue threshold for CRA credit would be increased from $1 million to $2 million, and up to $10 million for family farms, diluting the emphasis on revitalizing low-income communities and lending to the smallest businesses. And small banks with assets of less than $500 million could opt out of these new exam requirements and instead keep their current CRA examinations, which do not include any community development financing requirements.
Based on the Federal Reserve’s research into the financial impact of CRA, mortgage and small business lending in some LMI neighborhoods could drop by 20% over five years. That would result in a loss of $105 billion in loans. There is a reason the Federal Reserve did not sign on to this proposal.
There is no doubt that these changes would diminish the effectiveness of a law that was desperately needed when it was enacted and which remains essential to ensure banks meet the credit needs of all communities where they take deposits, not just the wealthy ones.
The regulators violate cardinal principles of rulemaking in terms of both fulfilling their statutory responsibilities under CRA and not proposing a rule based on clear and transparent data analysis. The FDIC and OCC need to discard the notice of proposed rulemaking and instead work with the Federal Reserve Board and propose an interagency rule that will augment the progress achieved under CRA in terms of reinvesting in LMI communities, not halting or reversing this progress.
OpEd Examples:
Here is an example of a recent OpEd Jesse Van Tol did in the New York Times, and three from our members:
A Green Light for Banks to Start ‘Redlining’ Again
Bank merger calls for community benefits agreement
Your View: Law promotes homeownership in poorer Lehigh Valley neighborhoods. Why weaken it?
Use this code to embed it on your site:
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The following sample resolution provides the history, purpose, and some of the basic functions of CRA and includes the key principles that are critical to preserve in the on-going regulatory reform effort by the nation’s bank regulators.
This template is a start and can be adapted by non-profits, localities, state legislatures and other governing bodies moved for immediate adoption. It should also include one or more clauses about the importance of CRA or the role it has played that is specific to the moving organizations or the local/state jurisdiction.
Resolution To Protect The Community Reinvestment Act – To Ensure That Efforts To Modernize Regulations Do Not Undermine The Intent Of The Law
WHEREAS, the Community Reinvestment Act (CRA) was enacted on October 12, 1977, to end the practice of “redlining” by financial institutions where they would draw a red line on a map around the neighborhoods they did not want to offer financial services; before the enactment of the CRA, redlining made it near impossible for low- and moderate-income Americans, people of color, and their neighborhoods to access credit services, such as mortgages and business loans, regardless of their qualifications or creditworthiness; and
WHEREAS, CRA was a landmark civil rights law passed in 1977 to end discrimination that was once common in America’s banking and housing markets; and
WHEREAS, discrimination in lending is still a problem; and
WHEREAS, the CRA states that “regulated financial institutions have continuing and affirmative obligations to help meet the credit needs of the local communities in which they are chartered”; and
WHEREAS, the CRA establishes a regulatory regime for monitoring the level of lending, investments, and services in low- and moderate-income neighborhoods traditionally underserved by lending institutions; examiners from three federal agencies assess and rate a bank’s activities in low- and moderate-income neighborhoods; and
WHEREAS, the federal agencies conducting CRA examinations are: the Office of the Comptroller of the Currency (OCC), which examines nationally chartered banks and the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board – both of whom examine state-chartered banks; and
WHEREAS, if a regulatory agency finds a bank not serving these neighborhoods, it can delay or deny that institution’s request to merge with another bank or to open a branch or expand any of its other services; the bank’s regulatory agency can also approve the merger application subject to specific improvements in a bank’s lending or investment record in low- and moderate-income neighborhoods; and
WHEREAS, a bank’s CRA rating can be downgraded if a federal agency uncovers evidence of illegal, abusive or discriminatory lending on their fair lending exams that occur at about the same time as CRA exams; and
WHEREAS, since 1996, according to analysis of bank lending data by the National Community Reinvestment Coalition (NCRC), CRA-covered banks issued more than 32 million small business loans in low- and moderate-income tracts, totaling $1.334 trillion, and $1.459 trillion in community development loans that support affordable housing and economic development projects benefiting low- and moderate-income communities; and
WHEREAS, a NCRC review of the CRA examinations of intermediate small banks (ISBs)/mid-sized banks (banks with asset sizes today between $346 million and $1.384 billion) found that ISBs produced over $9.3 billion of community development (CD) loans and grants about every three years; and
WHEREAS, studies have found that CRA-covered home lending is safer and sounder than non-CRA covered lending; when a larger share of lending is issued by CRA-covered banks than by independent mortgage companies, a neighborhood experiences lower delinquency rates and less risky lending; and
WHEREAS, despite the tremendous benefits of CRA to communities, the full potential of CRA has not been realized because it has not been updated to take into account changes in the banking industry and the economy; independent mortgage companies not covered by CRA now make more than 50 percent of the home mortgage loans in America and financial technology companies (“Fintech”) not covered by CRA operating via the internet are rapidly increasing their lending; and
WHEREAS, as part of CRA modernization, geographic assessment areas must remain the focus of CRA exams for all banks; banks should continue to be rated based on every geography where they lend or receive a significant percentage of their deposits; banks cannot be allowed to cherry-pick where they lend – or to ignore the credit needs of distressed and vulnerable communities; and
WHEREAS, as part of CRA modernization, CRA must consider bank lending, investing and services to communities of color in order to narrow racial and ethnic disparities in lending and wealth; and
WHEREAS, CRA should explicitly state the law’s obligation to fairly serve all races and ethnicities; banks that engage in large-scale illegal and harmful activities should fail their CRA exams; the federal bank agencies should improve their proposal to analyze data on lending by race and ethnicity but not to use that analysis in a meaningful way to inform fair lending review; and
WHEREAS, any new proposed scoring system must reduce CRA grade inflation under which 98% of banks pass and 90% receive the same rating of Satisfactory; changes in the ratings system that more accurately reflects bank performance will provide more incentive for the lagging banks to increase their lending, investing and services to underserved populations;
THEREFORE BE IT RESOLVED, that the (organization’s name), will support efforts to modernize CRA, but not relax or undermine the law’s goal and intent; and
BE IT FURTHER RESOLVED, that the (organization’s name), will oppose regulators efforts including in the just issued interagency Notice of Proposed Rulemaking to raise bank thresholds and exempt more banks, such as ISBs/mid-sized banks, from examination of their community development lending and investments; and
BE IT FURTHER RESOLVED, that the (organization’s name), will support modernizing CRA to apply it to non-bank institutions including mortgage companies, financial technology companies, and credit unions; and
BE IT FURTHER RESOLVED, that the (organization’s name), will oppose any effort to water down the penalties under CRA for discrimination; and
BE IT FURTHER RESOLVED, that the (organization’s name), will support a CRA with a clearly-defined ratings system that emphasizes lending, bank branches, fair lending performance, and responsible loan products for working class families;
BE IT FURTHER RESOLVED, that the recently issued federal interagency notice of proposed rulemaking expands geographical areas to consider lending beyond bank branches, bolsters the lending test to combat grade inflation, and positively expands data on community development financing to better assess banks’ records of financing neighborhood revitalization; and
BE IT FINALLY RESOLVED, that the (organization’s name) urges the agencies to recognize and encourage community benefit agreements that some banks negotiate with community-based organizations during the merger application process and which commit banks to make more loans, investments, and services available to traditionally underserved communities.
Respectfully submitted on _____,
Read more about local resolutions.
NYC Community Board 12 Manhattan, NY
NGO RESOLUTIONS
ICYMI: NCRC Senior Advisor Josh Silver last week gave a fantastic keynote address at @BuildingAlabama’s annual conference about the fight for a #JustEconomy! #TreasureCRA https://bit.ly/3sHnj5K
Read our statement on the new Community Reinvestment Act #CRA Proposal per @USOCC, @FDICgov, and @FederalReserve https://anhd.org/press-release/anhd-statement-new-community-reinvestment-act-cra-proposal
We are on the brink of significant banking reform, the first time in a quarter century. #TreasureCRA #responsiblebanking
“Dr. Cook’s confirmation is historic and essential, and we look forward to working with her on finalizing new CRA rules that increase lending, investments and services to LMI communities and communities of color,” @JesseVanTol. #JustEconomy #TreasureCRA https://bit.ly/3kYivos
The proposal would make CRA evaluations more rigorous with new performance metrics. “It’s a floor, not a ceiling,” said @JesseVanTol. via @reporterev w/ @bloomberglaw #treasureCRA https://bit.ly/3yiuGUS
“It has been 27 years since the government made a meaningful effort to keep CRA rules up to date with the convulsions of technology, financial industry consolidation and other key changes to how Americans work and live,” said @jessevantol. #TreasureCRA https://bit.ly/3sgO00U
Keep up with the campaign to strengthen CRA.
Reforming CRA must not become a pretext for relaxing CRA.
NCRC
740 15TH STREET, SUITE 400, WASHINGTON DC 20005 | 202 628-8866
COPYRIGHT © NCRC. SOME RIGHTS RESERVED.
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
Complete the form to download the full report:
Position Paper on CRA Reform