It's our money. Keep it in our neighborhoods.

We need a strong Community Reinvestment Act.

#TreasureCRA

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 problemYet some want to substantially weaken the law. We can’t allow that to happen.

Help us spread the word in your community. Use the tools on this page to tell your members of Congress and reach your friends and local leaders.

WE NEED TO MODERNIZE CRA, NOT RELAX IT.

Days
Hours
Minutes
Seconds

Take Action

The FDIC and OCC need to hear from you. Use these samples as a starting point to customize your letter, then follow our instructions on how to submit your comment letter.

Short Comment letter

[DATE], 2020

RE: Notice of Proposed Rulemaking, Community Reinvestment Act Regulations

To Whom it May Concern:

(Name of organization or individual) opposes the proposed changes to the Community Reinvestment Act (CRA) regulations as deeply misconceived. The OCC and FDIC would lessen the public accountability of banks to their communities by enacting unclear performance measures on CRA exams that would not accurately measure a bank’s responsiveness to local needs. Contrary to the agencies assertions that their changes would increase clarity and CRA activity, the result will be significantly fewer loans, investments and services to low- and moderate-communities (LMI).

(Insert a couple sentences about your experiences living in and/or serving underserved communities, and how you would be impacted by discouraging banks from focusing on people with low- and moderate-incomes. We strongly encourage you to add in elements of your experience into the paragraphs below.)

The agencies would dramatically lessen CRA’s focus on LMI communities in contradiction to the intent of the law to address redlining. The definition of affordable housing would be relaxed to include middle-income housing in high cost areas. In addition, the Notice of Proposed Rulemaking (NPRM) would count rental housing as affordable if lower-income people could afford to pay the rent without verifying that lower-income people would be tenants.

The NPRM would add financing large infrastructure such as bridges as a CRA eligible activity. Even financing “athletic” stadiums in Opportunity Zones would be an eligible activity. The NPRM would define small businesses and farms as having higher revenues, increasing the limit from $1 million to $2 million for small businesses and as high as $10 million for family farms.

While the NPRM recognizes changes in the banking industry such as the increased use of online banking, the NPRM’s reforms to the geographical areas on CRA exams are problematic and would reduce transparency. Neither the agencies nor the public can evaluate the agencies’ proposal to designate additional geographical areas on exams in the case of internet banks due to the lack of publicly available data. The public does not have a fair chance to offer comments on the effectiveness of significant proposed changes whose impacts are unknown.

The agencies propose an evaluation system that would further inflate ratings while decreasing the responsiveness of banks to local needs. The agencies propose a one ratio measure that would consist of the dollar amount of CRA activities divided by deposits. This ratio measure would likely encourage banks to find the largest and easiest deals anywhere in the country as opposed to focusing on local needs. Since banks could fail in one half of the areas on their exams and still pass under the proposal, the likelihood of banks seeking large and easy deals anywhere would increase. Also, the proposal would relax requirements that banks serve areas where they have branches first before they can seek deals elsewhere.

The proposal would retain a retail test that examines home, small business and consumer lending to LMI borrowers and communities but this retail test would only be pass or fail. In contrast, the current retail test has ratings that count for much more of the overall rating. Moreover, the proposal would result in branch closures since it would eliminate the test that scrutinizes bank branching and provision of deposit accounts to LMI customers.

The agencies also propose to allow banks that receive Outstanding ratings to be subject to exams every five years instead of the current two to three years. This would result in banks not making much effort in the early years of an exam cycle to serve their communities.

Small banks with assets less than $500 million could opt for their current streamlined exams instead of the new exams. The new exams would require banks to engage in community development financing while the existing small bank exams do not. This is another loss for communities.

Instead of weakening CRA, the agencies must enact reforms that would increase bank activity in underserved neighborhoods. The agencies do not address persistent racial disparities in lending by strengthening the fair lending reviews on CRA exams or adding an examination of bank activity to communities of color in CRA exams. At the very least, the agencies could add a category on CRA exams of underserved census tracts, which would likely include a high number of communities of color. The agencies also require banks to collect more data on consumer lending and community development activities but do not require banks to publicly release this data on a county or census tract level. Finally, the agencies do not require mandatory inclusion on exams of bank mortgage company affiliates, many of whom engaged in abusive lending during the financial crisis.

This deeply flawed proposal would result in less lending, investing and services for communities that were the focus of Congressional passage of CRA in 1977. This backtracking will violate the agencies’ obligation under the statute to ensure that banks are continually serving community needs. The FDIC and OCC need to discard the NPRM, and instead work with the Federal Reserve Board and propose an interagency rule that will augment the progress achieved under CRA instead of reversing it.

Instructions

1. Use your favorite text editor and this sample letter to personalize your comment.

2. When you’re ready with your comment, click the Get Started button (below) to go to the government’s comment submission form.

3. When you get there, copy/paste your text into the comment box or if you exceed the word limit you can attach your letter as a .docx, .jpeg or .pdf.

4. Add your contact information, check the box to acknowledge your comment will be made public, and click the green button that says “submit comment.”

5. You will then be directed to a confirmation page that indicates your comment was submitted successfully. This also gives you your official comment number. Your comment will also appear online within a few business days.

6. After you’ve submitted your comment online, there’s one more step. Please also send your comment by email to the FDIC. There is a possibility that the two agencies may issue separate and different final rules so we want to make sure your comments are officially received by both. Send your comment by email the FDIC at: Comments@fdic.gov. 
Include the RIN 3064-AF22 on the subject line of the message.

Long Comment letter

[DATE], 2020

RE: Notice of Proposed Rulemaking, Community Reinvestment Act Regulations

To Whom it May Concern:

(Name of organization or individual) opposes the proposed changes to the Community Reinvestment Act (CRA) regulations. According to dissenting FDIC Board member Martin Gruenberg, the FDIC’s and OCC’s Notice of Proposed Rulemaking (NPRM) on the Community Reinvestment Act (CRA) “is a deeply misconceived proposal that would fundamentally undermine and weaken the Community Reinvestment Act.”

The agencies would lessen the public accountability of banks to their communities by enacting unclear performance measures on CRA exams that would not accurately measure bank’s responsiveness to local needs. Public input into this obtuse evaluation framework would be more difficult and limited. Despite the agencies’ assertions that their proposal would increase clarity and bank CRA activity, the result would be significantly fewer loans, investments and services to low- and moderate-communities (LMI).

(Insert a couple sentences about your experiences living in and/or serving underserved communities, and how you would be impacted by discouraging banks from focusing on people with low- and moderate-incomes. We strongly encourage you to add in elements of your experience into the paragraphs below.)

The agencies would dramatically lessen CRA’s focus on LMI communities in contradiction to the intent of the law to address redlining in and disinvestment from LMI and communities of color. The definition of affordable housing would be relaxed to include middle-income housing in high-cost areas. In addition, the NPRM would count rental housing as affordable housing if lower-income people could afford to pay the rent without verifying that lower-income people would be tenants.

Under the NPRM, financing large infrastructure such as bridges would be a CRA eligible activity, which would divert banks’ attention from community development projects in LMI communities. Even financing “athletic” stadiums in Opportunity Zones would be an eligible activity. Small businesses and farms that could benefit from CRA would have higher revenues, increasing from $1 million to $2 million for small businesses and as high as $10 million for family farms. The agencies are drastically diluting the emphasis, established in the 1995 regulatory changes to CRA, of revitalizing LMI communities with affordable housing, small business development and community facilities.

While the NPRM recognizes changes in the banking industry such as the increased use of online banking, the NPRM’s reforms to the geographical areas on CRA exams are problematic and would reduce transparency. The agencies propose to establish new areas on exams that are outside of branch networks but where banks collect a significant amount of deposits. However, the deposit data collected now does not include customer geographical locations when customers open accounts via the internet. Thus, neither the agencies nor the public can assess the impacts of this proposal by estimating the numbers of banks with new areas and what parts of the country would have increased attention. The public does not have a fair chance to offer comments on the effectiveness of significant proposed changes whose impacts are unknown.

The proposed changes are likely to divert attention from areas served by branches since the agencies propose to make it easier for banks to engage in CRA-qualified activities outside of areas with branches. Currently, banks can engage in community development activities beyond areas with branches only after satisfactorily serving them. Under the NPRM, there would be no such restriction, allowing banks to find the easier places anywhere in the county to engage in community development without first responding to needs in the communities with branches.

The agencies propose an evaluation system that would further inflate ratings while decreasing the responsiveness of banks to local needs. Now, 98% of banks pass CRA exams; the proposal would likely push this up to 100%. The agencies propose a one ratio measure that consists of the dollar amount of CRA activities divided by deposits. This ratio measure would likely encourage banks to find the largest and easiest deals anywhere in the country as opposed to focusing on local needs, which are often best addressed with smaller dollar financing for small businesses or homeowners. Since banks could fail in one half of the areas on their exams and still pass under the proposal, the likelihood of banks seeking large and easy deals anywhere increases.

The proposal would retain a retail test that examines home, small business and consumer lending to LMI borrowers and communities but this retail test would be only pass or fail. In contrast, the retail test now has ratings and counts for much more of the overall rating. Moreover, the proposal would eliminate the service test that scrutinizes bank branching and provision of deposit accounts to LMI customers. Replacing this test is a formulaic measure that would result in branches in LMI areas counting for very little in the one ratio and hence would encourage banks to close them.

The agencies establish numerical targets under the one ratio exam for banks to hit in order to achieve Outstanding or Satisfactory ratings. However, the agencies base the targets on their research, which the agencies do not reveal in the NPRM. The public, therefore, cannot make informed judgements about whether the numerical targets would result in increases in activity, stagnant levels or decreases. The agencies have violated a basic premise of rulemaking, which is to enable the public to assess the impacts of a vitally important rule to communities.

The agencies also propose to allow banks that receive Outstanding ratings to be subject to exams every five years instead of the current two to three years. This stretch out reneges on the agencies’ statutory duties to ensure banks are continuing to respond to community needs. Banks with a five-year exam cycle would likely relax their efforts in the early years of the cycle. Banks would also have less accountability to maintaining acceptable recent CRA performance when they seek permission to merge with other banks.

Under the NPRM, small banks with assets less than $500 million could opt for their existing streamlined exams instead of the new exams. The new exams would require banks to engage in community development financing while the existing small bank exams do not. A significant subset of these banks which are now required to engage in community development finance would not be required to continue to do so, another loss for the community that is not justified (the NPRM says that small banks may actually perform better on the new exams than their larger counterparts).

Instead of weakening CRA, the agencies must enact reforms that would increase bank activity in underserved neighborhoods. The agencies do not address persistent racial disparities in lending by strengthening the fair lending reviews on CRA exams or adding an examination of bank activity to communities of color in CRA exams. At the very least, the agencies could add a category on CRA exams of underserved census tracts (as measured by loans per capita), which would likely include a high number of communities of color. The agencies also require banks to collect more data on consumer lending and community development activities but do not require banks to publicly release this data on a county or census tract level. Finally, the agencies do not require mandatory inclusion on exams of bank mortgage company affiliates, many of whom engaged in abusive lending during the financial crisis.

This deeply flawed proposal would result in less activity for communities most in need that were the focus of Congressional passage of CRA in 1977. The changes – less focus on people that are LMI, a simplistic one ratio, a bank could fail in one half of its areas and retail lending and branching would count for less of the rating – would increase grade inflation accompanied by a decrease in lending, investing and bank services to LMI consumers and LMI communities. This backtracking will violate the agencies’ obligation under the statute to ensure that banks are continually serving community needs.

The agencies violate cardinal principles of rulemaking in terms of fulfilling their statutory responsibilities under CRA and not proposing a rule based on clear and transparent data analysis about the rule’s impacts. The FDIC and OCC need to discard the NPRM 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.20

Instructions

1. Use your favorite text editor and this sample letter to personalize your comment.

2. When you’re ready with your comment, click the Get Started button (below) to go to the government’s comment submission form.

3. When you get there, copy/paste your text into the comment box or if you exceed the word limit you can attach your letter as a .docx, .jpeg or .pdf.

4. Add your contact information, check the box to acknowledge your comment will be made public, and click the green button that says “submit comment.”

5. You will then be directed to a confirmation page that indicates your comment was submitted successfully. This also gives you your official comment number. Your comment will also appear online within a few business days.

6. After you’ve submitted your comment online, there’s one more step. Please also send your comment by email to the FDIC. There is a possibility that the two agencies may issue separate and different final rules so we want to make sure your comments are officially received by both. Send your comment by email the FDIC at: Comments@fdic.gov. 
Include the RIN 3064-AF22 on the subject line of the message.

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.

2019 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, 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 more than 27 million small business loans in low- and moderate-income tracts, totaling $1.093 trillion, and $1.076 trillion in community development loans that support affordable housing and economic development projects benefiting low- and moderate-income communities; and

WHEREAS, the annual dollar amount of community development loans increased 443 percent from $17.7 billion in 1996 to $96 billion in 2016; and, 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 a “one ratio” approach on which most or all of a bank’s CRA rating would be based.  One ratio would consist of the dollar amount of a bank’s CRA activities (loans, investments, and services to low- and moderate-income people) divided by the bank’s assets or the bank’s “Tier One” capital.  One fraction cannot sum up how, if and where a bank is lending and investing and whether they are being responsive to the particular credits needs of their local community; 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.

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 federal legislation such as H.R. 1737/S.787, the American Housing and Economic Mobility Act, serve as example of proposals that will strengthen the CRA by covering more financial institutions, promoting investment in activities that help both low- and moderate-income and traditionally underserved communities, as well as strengthening sanctions against institutions that fail to follow the rules; 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 _____,

Tell @FDICgov and @USOCC: Our communities don’t need loopholes and confusion. It’s time to strengthen the Community Reinvestment Act, not weaken it. #TreasureCRA

TreasureCRA

Changes to the Community Reinvestment Act could mean a loss of billions of dollars in lending to low- and moderate-income communities. The government needs to hear from you: https://ncrc.org/treasurecra/#take-action

Keep up with the campaign to strengthen CRA.

Sign up for updates

principles for a modern CRA

1.

Don’t strip ‘community’ 
out of a law that’s supposed to strengthen communities.

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.

2.

Protect communities of color with explicit language against racial discrimination.

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.

3.

Keep all lenders accountable.

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.

4.

Set a clearly-defined CRA grading system.

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.

5.

Don’t be afraid to let banks fail.

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.

Reforming CRA must not become a pretext for relaxing CRA.

Read the rest of our principles for CRA reform.

The fight is just beginning.

Toolkit

Here are some things you can use in your email and social media messages to people you know and to leaders who need to hear from us.

#TreasureCRA

#itsOURmoney

#JustEconomy

We need to modernize and strengthen CRA, not weaken it.

We will not be silent while others try to dismantle one of the landmark laws of the Civil Rights era.

The Trump Administration wants to dismantle all sorts of civil rights protections for minorities and communities of color. Now they’re talking about watering down rules that prevent discrimination in lending. We can’t allow this to happen. There is no good reason to make it easier for lenders to discriminate against credit-worthy borrowers. There’s still compelling evidence that discrimination remains a problem in many communities.

We support modernizing the law, and strengthening it. But discrepancies in lending to low- and moderate-income communities and people of color remain a problem in communities nationwide. Regulators should be working to set and enforce rules that solve that problem, not to making life easier for banks that are enjoying record profits.

The largest banks have retreated in lending to low- and moderate-income borrowers while 98 percent of banks pass their CRA exams. The law needs to be modernized and the rules and tests for compliance need to be strengthened, not weakened.

We have been fighting to strengthen and modernize the Community Reinvestment Act for over a decade. We must remain clear and consistent that the changes to CRA must not sacrifice the spirit and intent of the act – to increase access to capital, credit and basic banking services in underserved communities. We need CRA, and we need it strengthened and modernized to combat rising wealth inequality and place-based disparities in economic opportunity,.

Regulatory reform must invigorate CRA, not eviscerate it.

The Community Reinvestment Act was a landmark civil rights law passed in 1977 to end discrimination that was once common in America’s banking and housing markets. For decades, entire neighborhoods were excluded from lending to buy homes and build small businesses. Those were poor and working-class neighborhoods where minorities and immigrants lived. That practice was called redlining. It prevented millions of people from building personal wealth through home ownership and entrepreneurship.

The law made a huge difference. A trillion dollars or more went to low- and moderate-income neighborhoods that were once excluded from the American Dream.

But discrimination in lending is still a problem. We still need CRA, and neighborhoods still need lenders to live up to their obligations under the law.

  • Banks earn billions in profits by investing our capital – and they have an obligation to reinvest that capital in the communities where it comes from. The government needs to hear from you: ncrc.org/treasurecra/#take-action
  • Proposed changes will make it easier for banks to cherry pick where they lend, and where they don’t. Act now to let the government know that weakening the CRA will not be tolerated: ncrc.org/treasurecra/#take-action
  • We need strong, meaningful enforcement of CRA to make sure banks meet the credit needs of the communities where they take deposits and do business. Submit your comment now: ncrc.org/treasurecra/#take-action
  • We can’t allow banks to cherry-pick where they lend – and where they don’t lend at all. We can’t allow a simple fraction to substitute for investment in local communities, or to mask its absence. #TreasureCRA
  • Since 1977, CRA has driven inclusion and equity in the financial markets, leveraging trillions of dollars in responsible loans, investments, and services for traditionally underserved communities. #TreasureCRA
  • Reforming CRA must not become a pretext for relaxing CRA. #TreasureCRA
  • CRA exams must retain a local geographical focus. #TreasureCRA
  • Public participation is the heart and soul of CRA and must be safeguarded. #TreasureCRA
  • To combat rising inequality and placed-based disparities in economic opportunity, we need a vital CRA. #TreasureCRA #JustEconomy
  • Any changes to CRA should strengthen it and live up to the spirit and intent of the act – ensuring that low and moderate income communities and communities of color have equal access to capital and credit. #TreasureCRA
  • Adjustments to CRA could help more Americans become home and business owners; or on the other hand, enable lenders to ignore entire neighborhoods.  #TreasureCRA #JustEconomy
  • The largest banks received 2.5 billion from tax cuts in the last quarter, and now they want to walk away from working class and poor communities. In response, we are launching the #TreasureCRA campaign for fairness in banking. Now we need to rally, dig deep and flood the government with our comments. We need your voice and your network: ncrc.org/treasurecra/#take-action
  • Tell the regulators: we will not stand by silently while others try to dismantle one of the landmark laws of the Civil Rights era. Join the #TreasureCRA campaign and submit your comment now: ncrc.org/treasurecra/#take-action
  • Tell the government: we can’t allow banks to cherry-pick where they lend – and where they don’t lend at all. We can’t allow a simple fraction to substitute for investment in local communities, or to mask its absence. ncrc.org/treasurecra/#take-action
  • CRA has been an essential tool to ensure banks meet the needs of the communities where they take deposits. But the proposed changes will make it easier for banks to cherry pick where they lend, and where they don’t. The time to act is now. We only have 60 short days to make an impact: ncrc.org/treasurecra/#take-action

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, 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 more than 25 million small business loans in low- and moderate-income tracts, totaling more than $1 trillion, and $980 billion in community development loans that support affordable housing and economic development projects benefiting low- and moderate-income communities; and

WHEREAS, the annual dollar amount of community development loans increased 443 percent from $17.7 billion in 1996 to $96 billion in 2016; and, 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 a “one ratio” approach on which most or all of a bank’s CRA rating would be based.  One ratio would consist of the dollar amount of a bank’s CRA activities (loans, investments, and services to low- and moderate-income people) divided by the bank’s assets or the bank’s “Tier One” capital.  One fraction cannot sum up how, if and where a bank is lending and investing and whether they are being responsive to the particular credits needs of their local community; 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.

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 _____,

cra image
(Click on the image to download)

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:

  • Contact a reporter and encourage them to write a news story about CRA
  • Submit a guest column about CRA to an opinion section
  • Send a letter to the editor about CRA
  • Persuade an editorial board to write an editorial about CRA

How to reach out:

  1. Determine what local and regional media are available to you – online, newspapers, magazines, TV, radio, blogs, podcasts, Facebook, LinkedIn and Meetup groups. Even NextDoor or local email lists might be an option. Determine if they cover topics that fall under CRA (banking, lending, housing, community development, economic development, community benefits…etc).
  2. Find the appropriate reporter. It could be someone who covers local business and banking, or housing, development, urban renewal, poverty, discrimination or social services. Study their work. Find connections with your work.
  3. Formulate your pitch. Send via email. Follow up by phone if you don’t get a response. Being able to put your face with your name will help you build the relationship. Attend press events or ask to meet up for coffee and make your pitch then.
  4. Local reporters are busy, they don’t have a lot of time for coffee and conversation. When you get responses, be sure to respond asap.
  5. If a reporter likes your pitch, be sure to help find sources and set up interviews, preferably with members of your organization and/or community.
  6. Once published, be sure to share far and wide with your entire network, including with NCRC.

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.

Example Local Article:

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?

https://www.sfchronicle.com/opinion/openforum/article/Save-the-Community-Reinvestment-Act-a-path-to-14960588.php

 

 

Use this code to embed it on your site:

<div class=”iframely-embed”><div class=”iframely-responsive” style=”padding-bottom: 66.1454%; padding-top: 120px;”><a href=”https://ncrc.org/treasurecra/” data-iframely-url=”//cdn.iframe.ly/api/iframe?url=https%3A%2F%2Fncrc.org%2FtreasureCRA%2F&amp;key=738171d7203bc68ef1de3239cfe4a24b”></a></div></div><script async src=”//cdn.iframe.ly/embed.js” charset=”utf-8″></script>

READ MORE

NCRC Director of Policy and Government Affairs Testifies in Front of House Financial Services Subcommittee on Consumer Protection and Financial Institutions About Winners and Losers in Proposed CRA Changes

Good afternoon Chairman Meeks, Ranking Member Luetkemeyer and the Members of the House Subcommittee on Consumer Protection and Financial Institutions. Thank you for the opportunity to testify and for convening this important hearing on the Community Reinvestment Act (CRA) to discuss the winners and the losers in the proposed rulemaking formally published last week by

Adding Underserved Census Tracts as Criterion on CRA exams

(Download) Introduction The Community Reinvestment Act (CRA) is an income-based law. Accordingly, the regulations and exams focus on evaluating bank lending, investing and services to low- and moderate-income (LMI) borrowers and tracts. However, one of the major motivations prompting the passage of CRA in 1977 was reversing redlining and disinvestment from minority as well as

Comment Period for CRA notice of proposed rulemaking now open

Today is the day, the clock is ticking, and we’ve got to mobilize everyone we know who cares about the economic health, wealth and justice in America’s communities. The government published today and opened up for public comments a plan to radically change and diminish the impact of the Community Reinvestment Act (CRA). Let’s make no

Summary Fact Sheet on the OCC and FDIC CRA Proposed Rule

In the words of dissenting Federal Deposit Insurance Corporation (FDIC) Board member Martin Gruenberg, the FDIC and the Office of the Comptroller of the Currency’s (OCC) Notice of Proposed Rulemaking (NPRM) on the Community Reinvestment Act (CRA) “is a deeply misconceived proposal that would fundamentally undermine and weaken the Community Reinvestment Act.” The agencies would

CRA SUCCESS STORIES

GA
OH
All
MA
MN

NCRC
740 15TH STREET, SUITE 400, WASHINGTON DC 20005 | 202 628-8866
COPYRIGHT © NCRC. SOME RIGHTS RESERVED.

NCRC logo with name