“Part of their overall function as a government agency is to promote minority entrepreneurship. You’d think under all their programs they’d want to know the basic demography of their borrowers,” said Bruce Mitchell, a senior research analyst at the National Community Reinvestment Coalition.
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The impacts of the COVID-19 pandemic have exacerbated the concentration of wealth in the United States, and emergency measures as well as structural change are urgently needed to address the widening racial wealth gap, a report from Inequality.org, a project of the Institute for Policy Studies, and the National Community Reinvestment Coalition, argues.
Even if the joint resolution dies in the Senate as expected, the rule change won’t be completely in the clear: The National Community Reinvestment Coalition is suing to block it, saying the OCC didn’t provide enough consideration to public feedback.
“This commitment provides (the bank) an opportunity to increase its Community Reinvestment Act activity, and to redirect it to where it is needed most,” said Jesse Van Tol, NRCR CEO. “This is how the (act) should work.”
According to a 2018 study by the National Community Reinvestment Coalition, the economic and racial segregation caused by redlining persists today: 74% of the neighborhoods the federal government deemed “hazardous” to lend to nearly a century ago are low to moderate income today, and 64% of them are minority neighborhoods.
A “mystery shopper” test at 32 bank branches in Los Angeles, carried out by the National Community Reinvestment Coalition, a membership organisation for small businesses, found white customers were given subtly better customer service—for example, being told more about available products and their costs. Black applicants were asked to provide more information.
The National Community Reinvestment Coalition (NCRC), found a racial disparity and bias in small business lending from banks in their 2008–2016 study, leaving minority business owners more vulnerable to the already economically devastating pandemic by having less access to credit and funding.
The National Community Reinvestment Coalition (NCRC) and the California Reinvestment Coalition (CRC) filed a lawsuit against the Office of the Comptroller of the Currency (OCC) on Thursday over its revamp of the Community Reinvestment Act (CRA), a 1977 anti-redlining law that governs lending in low-income neighborhoods.
NCRC’s CEO Jesse Van Tol said the organizations “have been left with no choice but to file suit against the OCC to protect our most vulnerable and underserved communities.”
“COVID-19 struck a nation that was already mostly struggling,” said Jesse Van Tol, CEO of NCRC. “Recovery in most places will be even more challenging than in those where investment was already concentrated. There is no doubt that the protests that have erupted nationwide are at least in part motivated by the nation’s long history of racial economic inequality.”
“This agreement with First Merchants Bank is a significant step forward and reflects practices that all banks can adopt in order to address the racial wealth divide,” Dedrick Asante-Muhammad, the coalition’s chief of race, wealth and community, said in the announcement.
The National Community Reinvestment Coalition and the California Reinvestment Coalition said the May 20 rule was rushed through during the coronavirus pandemic and violates the Administrative Procedure Act. Two other regulators, the Federal Deposit Insurance Corp. and the Federal Reserve, didn’t sign onto the OCC’s regulation.
What’s more, a National Community Reinvestment Coalition study found that banks outperformed credit unions on 65% of fair lending indicators in home purchase, refinance and home improvement lending to low- and moderate-income areas.
Gentrification is changing the Miami metro more rapidly than in most other U.S. regions, according to a recent study by the National Community Reinvestment Coalition.
“COVID-19 struck a nation that was already mostly struggling,” the authors wrote. “Recovery in most places will be even more challenging than in those where investment was already concentrated. Unless we act now.”