WE NEED A FINANCIAL SYSTEM GROUNDED IN FAIRNESS.

We need a strong Community Reinvestment Act.

#TreasureCRA

Welcome to the biggest fight in decades for fairness in America’s housing and finance laws.

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.

Discrimination in lending is still a problem, and we’re concerned about ideas from some regulators that would substantially weaken the law. We can’t allow that to happen.

WE NEED TO MODERNIZE CRA, NOT RELAX IT.

What's Next?

  • In August 2018, the Office of the Comptroller of the Currency issued an Advanced Notice of Proposed Rulemaking, the first formal step required to revise CRA rules. The public comment period closed Nov. 19, 2018.
  • The OCC must review public comments before it issues any proposal for new rules – and that would be followed by another public comment period.
  • Two other agencies, the Federal Reserve and the Federal Deposit Insurance Corporation, set and enforce CRA rules for some banks. They will also review the comments submitted to the OCC.

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Take action, spread the word.

Our communities and leaders need to know:

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

Keep up with the campaign to strengthen CRA.

Join our mailing list.

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.

Spread the word.

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

#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.

  • CRA matters because we need a financial system grounded in fairness. We can’t allow the government to weaken the Community Reinvestment Act. #TreasureCRA #JustEconomy
  • 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
  • As politicians work to modernize the Community Reinvestment Act,, we must make sure they respect the spirit of this policy.  #TreasureCRA #JustEconomy
  • The OCC is undertaking a serious process that could reshape lending in low- and moderate-income communities for a generation.  #TreasureCRA #JustEconomy
  • 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. Subscribe to NCRC’s mailing list and follow us on social for what’s next in our campaign. https://ncrc.org/treasureCRA/
  • 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, nearly 500 national and local partners standing up together for fairness in banking. Subscribe to NCRC’s mailing list and follow us on social for what’s next in our campaign. https://ncrc.org/treasureCRA/
  • .@USOCC’s Advanced Notice of Proposed Rulemaking is the first step towards weakening the Community Reinvestment Act. We have 75 days for public comment. 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. https://ncrc.org/treasureCRA/ 
  • The OCC just released the Advanced Notice of Proposed Rulemaking. 487 civil rights and community organizations have stated that reforming CRA must not become a pretext for relaxing CRA. Read our joint letter:  #TreasureCRA
  • Hundreds of national and local partners from around the country are standing together to ensure banks continue serving the needs of low- and moderate-income communities.  We sent a CRA sign-on letter to all three banking regulators laying out guiding principles for CRA reform.
  • If the OCC ultimately proposes one metric that is determinative of a bank’s CRA grade, then the end result will undoubtedly be less responsiveness to local community needs. Check out NCRC’s recommendations for strengthening the Community Reinvestment Act (CRA), a law designed to stop discrimination in mortgage and small business lending.

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 _____,

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Audio: What is going on with the Community Reinvestment Act?

Listen to this discussion hosted by NCRC’s Senior Civil Rights Investigator Rose Ramirez, featuring Community Reinvestment Act Manager Kevin Hill and Senior Community Reinvestment Act Advisor Josh Silver on the Advance Notice of Proposed Rulemaking regarding CRA and what it means to communities throughout the country.

Sign on letter for CRA ANPR

  Click here to sign on to this letter. November 19, 2018 Reforming the Community Reinvestment Act Regulatory Framework Docket

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