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.
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
Don’t strip ‘community’
out of a law that’s supposed to strengthen communities.
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.
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.
Protect communities of color with explicit language against racial discrimination.
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.
Keep all lenders accountable.
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.
Set a clearly-defined CRA grading system.
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.
Don’t be afraid to let banks fail.
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.
#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.
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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We’re counting on these people and organizations.
Importance of local press
While many local press outlets continue to struggle with the advent of 24-hour news cycles, others are holding on strong due to their high-level reporting on local issues that matter for their community members day-to-day lives. These sources can be an invaluable resource for community organizations trying to build momentum for a 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.
How to reach out:
Sample Pitch:
Bank regulators in Washington are working on new rules to enforce 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. Changes to how CRA works could 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. Here is an example of a recent OpEd Jesse Van Tol did in the New York Times:
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?
Seven cities accounted for nearly half of the gentrification nationally: New York City, Los Angeles, Washington, D.C., Philadelphia, Baltimore, San Diego and Chicago.
A POLITICO investigation shows a persistent double standard in the president’s handling of relief efforts for Hurricane Harvey and Hurricane Maria.
Citizens just lost an invaluable protection from the ‘fine print’ that strips their right to go to court when cheated or taken advantage of by corporations.
Next year, if the mayor’s plans work out, some of the 300,000 residents of Stockton, Calif., will get $500 per month with no strings attached.
Washington, DC – Today, the National Community Reinvestment Coalition applauded remarks from Senate Majority Leader Harry Reid on GSE reform. In
Washington, DC – Today, in reaction to President Obama’s speech on housing in Arizona, NCRC President and CEO John Taylor made
We need to modernize the Community Reinvestment Act, not relax it. Don't let them weaken CRA or reboot redlining.#TreasureCRA Click To Tweet
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 https://ncrc.org/treasureCRA Click To Tweet
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 #JustEconomy… Click To Tweet
What Happens When the Rich Invest in Racial Equity #JustEconomy. Thanks @ahachad2 https://t.co/4RLkHfNe4y via @yesmagazine
— NCRC (@NCRC) May 18, 2018
