The coronavirus pandemic and its disparate effect on low- and moderate-income (LMI) communities of color has underscored the importance of both hospitals and medical care, and banks and financial institutions with equitable community economic recovery. Health and wealth are intrinsically linked. The COVID-19 pandemic illustrates this well. The Community Reinvestment Act (CRA) is and will continue to be an essential community resource for COVID-19 economic recovery in the communities hit the hardest by the pandemic. For hospitals, health systems and medical professionals who ultimately advocate for increased health outcomes, addressing the underlying social determinants of health in LMI communities goes hand-in-hand with the objectives of banks and financial institutions who wish to meet the credit needs of LMI community members in their geographic footprint.
Hospitals and banks have analogous mandates to community commitment. Nonprofit hospitals, mandated by the Affordable Care Act, must address upstream social determinants of health beyond the hospital walls, utilizing the Community Health Needs Assessment process to address and plan local commitments. This requirement functions to sustain the hospital’s nonprofit status by the Internal Revenue Service (IRS). Comparably, banks are beholden by CRA to meet the credit needs of LMI neighborhoods in their geographic footprint. To determine compliance, banks are examined on a regular basis by regulators, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) or the Federal Reserve Board of Governors (FRB).
Currently, the FRB has an open comment period in regard to an Advanced Notice of Proposed Rulemaking (ANPR).
In late September 2020, the Federal Reserve Board (board) approved an ANPR on CRA. This ANPR is thorough; it runs 186 pages and asks the public 99 questions. The public has 120 days from publication in the Federal Register to offer their comments and respond to the questions. The public comment period ends on February 16, 2021. As an ANPR, this document is not a proposed change to the Federal Reserve’s CRA regulations. However, it offers much detail about a rule change the board is contemplating, including new performance measures, possible changes to the structure of new CRA exams, expansion in the geographical areas covered by CRA exams and expansion and refinement to the activities that would count on CRA exams.
The board’s ANPR follows a final CRA rule issued this May by the OCC. The OCC’s rule would decrease lending, investment and services in LMI communities by over-simplifying performance measures on CRA exams and broadening what counts on CRA to include activities that either partially or tangentially benefit LMI communities, including infrastructure projects like major bridges that may not be in or near LMI communities. The board’s ANPR is more in line with the intent of the act.
Let the board know how you believe CRA has assisted your community and enhanced upstream social determinants of health, which ultimately creates a healthier community with improved health outcomes as well as reduced costs to the hospital. As a values-based anchor institution, hospitals are committed anchors to its surrounding community. CRA is a tool that allocates resources to underserved communities and it addresses social needs that ultimately improve population health.
The following materials provide information and resources to help you create an impactful comment letter.
How to Comment
Members of the public can comment to the Federal Reserve Board via email: email@example.com. The board asks that the subject line of both the comment and of the email includes the Docket Number R-1723 and RIN Number 7100-AF94l. The comment period ends on February 16, 2021.
Use this sample comment as a guide for yours.
Tools and Resources
Redlining and Neighborhood Health
NCRC recently released a major report finding significant correlations between redlining and susceptibility to COVID. In the 1930s, the Home Owners Loan Corporation (HOLC) commissioned the production of maps that rated neighborhoods based on the risk of lending in them. Working class and minority neighborhoods usually received the riskiest designation of hazardous. The designations subsequently facilitated redlining and discrimination against these neighborhoods, which remain starved of credit and are predominantly lower income and minority. These neighborhoods also have the highest incidence of health conditions such as asthma, diabetes, kidney disease and stroke, which make residents more susceptible to COVID-19. Life expectancy is almost four years lower in the redlined communities than the neighborhoods not designated as hazardous by HOLC.
CRA Qualified Lending Report Tool
To understand the breadth of CRA qualified lending in your hospital’s or health system’s geographic footprint, please use NCRC’s qualified lending reported tool. This tool provides the qualified lending reported from 2009 to 2018 in selected communities that are at risk for rule changes.
- Hospitals Can Partner With Banks Under The Community Reinvestment Act To Create Healthy Communities
- NCRC’s Initial Analysis Of Federal Reserve’s ANPR On The Community Reinvestment Act: A Step Forward But Needs To Be More Rigorous
- The Business Case for Population Health Management
- Health Care System Investments in Population Health Improvement
When crafting your comment letter, the following key messages may be useful to incorporate:
- The Community Reinvestment Act (CRA) will be essential for COVID-19 economic recovery in the communities hit the hardest by the pandemic.
- Lower-income communities and communities of color have been the hardest hit by COVID-19. CRA will be essential for their economic recovery.
- COVID-19 will drive neighborhoods deeper into poverty.
- Poverty, income, social status are all social determinants of health.
- New CRA rules should help lower-income communities and communities of color recover from COVID-19, and not make things worse for them.
- CRA is supposed to make sure banks serve all the communities where they maintain operations and receive deposits, which means that banks should not focus solely on thefinancial services needs of wealthy and predominantly White communities.
- Banks will be critical to local economies after COVID-19. So will the law that’s supposed to make sure banks serve their communities, the Community Reinvestment Act.
- Any CRA rule changes have to ensure that low- and moderate-income communities and communities of color have equal access to capital and credit.
- Banks are essential for local economies. They decide who gets mortgage and small business loans – and who doesn’t. Banks are also major sources of community development investment capital and philanthropic grants to local nonprofits. But there’s something else to bear in mind about banks: They also have a long, dark history and a well-documented recent record of discrimination.
- There is a higher prevalence of COVID-19 risk factors in historically “redlined” neighborhoods.
- Strong enforcement of CRA is still important for lower-income communities and communities of color. When banks are not held accountable and required to serve all the communities where they take deposits, the result is neglect, disinvestment and discrimination.
- Under the current CRA regulatory framework, 98% of banks pass their CRA exams. The rules should be updated so bank exams are more rigorous and representative of how banks reinvest in the communities they serve.
- With the ability to utilize CRA credit, banks are motivated to collaborate with hospital anchors to fund much needed community development projects that ultimately enhance population health.
- Much research illustrates that health outcomes are only a small part related to clinical care and personal behavior, while 60% can be attributed to social and environmental conditions.
- Access to housing, jobs, transportation, education, healthy food and recreation are the building blocks for a healthy community, outside of clinical care. Working with banks to support those building blocks is supported by a robust CRA.
- Hospitals need banks as partner investors on community-based projects such as affordable housing that ultimately enhance population health outcomes.
Karen Kali is NCRC’s Senior Program Manager for Special Initiatives.