American Banker: Banks hint at legal challenges to CRA rewrite

American Banker, August 8, 2022, Banks hint at legal challenges to CRA rewrite

The National Community Reinvestment Coalition asks that the CRA explicitly consider bank activity by race or ethnicity — a request that would be legally tricky. The bank regulators’ proposal sidesteps this issue by calling for large banks to disclose the racial and ethnic background of their borrowers, a move that they hope will provide more transparency to the public about what groups are getting access to credit.

“As important as these proposed changes are, they fall far short of the measures needed to remedy the persisting legacy of discrimination in the areas covered by the CRA,” the coalition said in its comment letter. “Ongoing disparities and patterns of discrimination continue, against a backdrop of systemic racism that has plagued our nation for centuries.”

The reinvestment coalition also requests that regulators crack down on bank-fintech partnerships in their CRA exams: “We ask the agencies to expand upon their proposal to include partnerships with banks and nonbanks for retail lending. When a bank partners with more than one non-bank, the lending of all the non-banks needs to be totaled together for calculating if the threshold is exceeded for purposes of creating assessment areas.”

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Redlining and Neighborhood Health

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

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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